Posts Tagged ‘CN financial results’

CN Net Income Fell in 1st Quarter

April 28, 2021

Canadian National executives said this week that they expect freight volume growth in the high single digit percentage range this year.

They made the assessment when announcing first quarter financial results that showed a drop in net income.

At the same time CN said it experienced during the quarter record intermodal and grain traffic.

Management expects an improving economy to boost merchandise traffic.

For the first quarter, CN said  net income fell 3.7 percent to CA$974 million, or $1.37 per diluted share, from CA$1.01 billion, or $1.42 per diluted share, in the same period a year ago.

The total revenue of CA$3.5 billion for the quarter was “in line” with the same quarter in 2020, CN said in a news release.

Operating income rose 9 percent to CA$1.3 billion, but adjusted operating income of CA$1.2 billion was down 2 percent.

The statement described the first quarter results as “solid,” and included a year-over-year increase in traffic volume of 5 percent.

During a conference call to discuss the first quarter results, CN executives said they expect double-digit growth in earnings per share, up from between 7 percent and 9 percent.

CN’s first quarter volume was up 7 percent based on carloads or 5 percent based on revenue ton-miles, the preferred metric of the Canadian railways.

“Here at CN, we’re off to a good strong running start,” CN CEO JJ Ruest said during the earnings call.

Intermodal revenue ton-miles was up 19 percent while grain and fertilizers shipments rose 26 percent.

First quarter volume, based on gross ton miles, was a record.

At the same time, average train speed dipped 1 percent. Terminal dwell times held steady and car miles per day were up 5 percent.

During the period train length rose 5 percent, leading to a fuel efficiency improvement of 4 percent.

The operating ratio of was 62.5 percent with an adjusted OR of 66.3 percent for the quarter. A year ago, CN had an operating ratio or adjusted operating ratio of 65.7 percent.

CN Revenue Up 2% in 2020 4th Quarter

January 27, 2021

Canadian National reported this week that fourth quarter 2020 revenues rose 2 percent to C$3.656 billion vs. the same period in 2019.

CN executives said the increase was due to increased shipments of U.S. grain, higher international container traffic via the Port of Vancouver, and freight rate increases.

However, CN said it also had lower applicable fuel surcharge rates and lower volumes of petroleum crude.

Operating income was up 16 percent to C$1.411 billion and the operating ratio fell 4.6 points to 61.4 percent compared with fourth-quarter 2019 results.

Total revenue ton miles were up 10 percent and carloads were up 7 percent in the fourth quarter compared to the fourth quarter of 2019.

Revenues for 2020 fell 7 percent to C$13.819 billion, which CN said was due to lower volumes across most commodity groups, primarily in the second and third quarter due to the COVID-19 pandemic.

CN said these lower traffic volumes were partly offset by freight rate increases as well as record Canadian grain shipments.

Operating income dropped 15 percent to C$4.777 billion, and the operating ratio increased 2.9 points to 65.4 percent vs. 2019.

Total RTMs and carloads were down 5 percent for the year compared with 2019.

CN expects to spend C$3.0 billion in 2021 on capital expenditures and is projecting “mid-single digit volume growth in 2021 in terms of RTMs.

CN Revenue Down 11% in 3rd Quarter

October 21, 2020

Canadian National reported this week that during the third quarter it had revenues of C$3.41 billion (US$2.59 billion), a decrease of C$421 million (US$319 million) or 11 percent when compared with the same quarter of 2019 period.

In a news release, CN attributed the drop in revenues “mainly due to lower volumes across most commodity groups caused by the ongoing effects of the COVID-19 pandemic.”

CN said other factors included lower fuel surcharge rates, which were partly offset by freight rate increases, and increased shipments of Canadian grain.

Revenue ton miles fell 7 percent while freight revenue per RTM fell by 3 percent over the year-earlier period.

Operating expenses were down 8 percent to C$2.04 billion (US$1.55 billion). CN said this was prompted by lower fuel and labor costs, and fewer purchased services and material expenses.

“The decrease in the first nine months was partly offset by a loss on assets held for sale in the second quarter, resulting from the company’s decision to market for sale for on-going rail operations, certain non-core lines,” CN officials said in a statement.

The third quarter also saw CN experience increased traffic compared with the second quarter of this year. However, overall demand remained below 2019 levels.

CN said by the end of the third quarter some commodities had recovered at or close to 2019 levels.

This included intermodal traffic, lumber and panels used in home renovations and new home construction, and export grain and fertilizers.

Such commodities as finished vehicles, industrial products, petroleum and chemical products, coal, and frac sand remained below pre-pandemic levels.

 “As we look at the fourth quarter and beyond, we continue to see sequential improvements and momentum leading us to have a cautious optimism about the future,” CN President and CEO JJ Ruest said in a statement. “We remain confident in our ability to continue delivering long-term shareholder value.”

CN Revenue Fell 19% in 2nd Quarter

July 23, 2020

Canadian National said this week that its second quarter revenue fell 19 percent to CA$3.2 billion from nearly CA$4 billion a year ago.

The company said the financial results reflected lower volumes due to the COVID-19 pandemic.

Operating income was CA$785 million, down from CA$1.68 billion a year ago; net income of CA$545 million was down from CA$1.36 billion; and diluted earnings per share of 77 Canadian cents per share, down from CA$1.88.

Adjusted earnings per share were CA$1.28, down from CA$1.73. The operating ratio was 60.4 percent for the quarter, up from 57.5 percent compared with a year earlier.

Operating expenses rose 6 percent to CA$2.4 billion, mainly driven by a loss on assets held for sale resulting from the decision to market for sale for on-going rail operations, certain non-core lines, partly offset by lower fuel and and labor costs.

Excluding that one-time charge, operating expenses fell 15 percent compared with second quarter 2019 expenses.

CN attributed falling revenue to lower volumes across most commodity groups caused by the pandemic and lower applicable fuel surcharge rates, which were partly offset by increased shipments of Canadian grain, higher Canadian coal exports and freight rate increases.

“By being adaptable, we were able to swiftly rightsize our resources and continue to provide our essential transportation services to our customers, the economy and the communities we serve,” said President and CEO J.J Ruest in a statement.

During an earnings call with investors this week, CN executives said rising volumes or a second wave of the coronavirus pandemic that would hammer the company’s earnings.

Traffic volume in the second quarter fell 16 percent on a carload basis, or 18 percent when measured by revenue ton-miles, the preferred metric of the Canadian railways.

CN said it ran fewer but longer trains, closed yards and shops, furloughed 4,000 employees, and storing a third of its locomotive fleet and 20,000 freight cars.

Some of those changes are expected to endure said Chief Operating Officer Rob Reilly.

“The idled locomotive shops and switching yards will remain closed,” Reilly said. “We will continue to improve train size year-over-year.”

The closed yards are at Battle Creek, Michigan; Jackson, Mississippi; Garneau, Quebec; and Kamloops, British Columbia.

CN reduced mechanical shop activity at more than 20 locations and closed four locomotive shops.

CN 1st Quarter Revenue Flat

April 29, 2020

Canadian National this week said its first quarter 2020 revenue was flat at CA$3.5 billion compared with the year-ago period.

Diluted earnings per share (EPS) rose 31 percent to CA$1.42, while adjusted diluted EPS increased 4 percent to CA$1.22, compared with the first quarter of 2019.

CN posted an operating ratio of 65.7 percent, an improvement of 3.8 points or 1.5 points on an adjusted basis, during the quarter.

Operating income increased 13 percent, or 4 percent on an adjusted basis, to CA$1.2 billion versus the year-ago period.

Operating expenses for the quarter decreased 5 percent to CA$2.3 billion, driven mainly by lower labor costs, depreciation expense and fuel expense.

In April CN’s traffic fell 15 percent led buy a nearly 90 percent drop in automotive volume due to the closure of North American assembly plants during the COVID-19 pandemic.

CN expects traffic to bottom out in May. In the meantime it has stored 500 locomotives and 15 percent of its freight car fleet.

It has suspended operations in yards in Battle Creek, Mich.; Jackson, Mississippi.; Garneau, Quebec; and Kamloops, British Columbia, and reduced mechanical shop activity at more than 20 locations across the system.

“I am very proud of how we recovered quickly in March from the service disruptions in February,” said CN President and Chief Executive Officer JJ Ruest in a statement.

“Our network is very fluid, and we are continuing the temporary right-sizing of our resources to match the weaker demand caused by the global recession. We are committed to providing long-term shareholder value by delivering on our strategic capacity investments for growth and by deploying technological innovations.”

In a news release, CN attributed its flat revenue during the first quarter in part to the impact the blockades and pandemic had on volume.

The pandemic led CN to revise its 2020 financial outlook, saying the demand for transportation services are correlated with the duration of containment measures and their effect on businesses and consumers, which remain uncertain.

CN has reduced 2020 capital expenditures by CA$200 million to CA$2.9 billion, but will spend CA$1.6 billion on track maintenance this year.

CN Revenue Fell 6% in 4th Quarter

January 31, 2020

Canadian National said this week that a labor strike and weak freight business contributed to a decline in revenue in the fourth quarter of 2019.

In a news release, CN said revenue declined 6 percent to CA$3.6 billion; diluted earnings per share (EPS) fell 22 percent to CA$1.22, adjusted diluted EPS dropped 16 percent to CA$1.25; and operating income and adjusted operating income each tumbled 16 percent to CA1.2 billion and CA$1.25 billion, respectively.

All figures are in comparison to the fourth quarter of 2018.

CN posted an operating ratio of 66 percent, up 4.1 points, and an adjusted operating ratio of 65.2 percent, up 4 points.

For the 2019 calendar year, CN had revenue of CA$14.9 billion, up 4 percent; a diluted EPS of CA$5.83, down 1 percent; an adjusted EPS of CA$5.80, up 5 percent; operating income of CA$5.6 billion, up 2 percent; and an adjusted operating income of CA$5.7 billion, up 3 percent.

The 2019 operating ratio was 62.5 percent, up 0.9 points; and an adjusted OR of 61.7 percent, up 0.2 points.

Traffic volume in the fourth quarter dropped 7 percent on a carload basis, or 13 percent when measured by revenue ton miles. Every commodity category fell during the quarter.

For the year CN’s traffic volume fell 1 percent on a carload basis or 3 percent on a revenue ton mile basis.

“We remain focused on executing our strategy of long-term sustainable growth at low incremental cost,” said CN President and Chief Executive Officer J.J. Ruest in a statement.

“”Our strategic deployment of technology, the next step in our precision scheduled railroading model and our next driver of value, is well underway. At the same time, we continue to closely monitor the freight volume environment and rightsize our resources and costs to demand.”

CNS said that during the past years it has spent CA$7.4 billion in capital expenditures to increase network capacity, efficiency and resiliency

Ruest said the 2020 capital spending budget will rise to CA$3 billion.

Although CN sees growth opportunities in 2020, it expects low single-digit volume growth in terms of revenue ton miles.

“The first half will be a challenge,” Ruest said.

CN is targeting an EPS growth in the mid single-digit range this year compared to adjusted diluted EPS of CA$5.80 in 2019.

Ruest said CN will look to additional small acquisitions and partnerships as a way to boost freight volume.

“We’re very mindful for the rail industry to be successful, including at CN, we need to grow the pie,” he said.  “Just exchanging pieces of pie, that’s not a long-term solution.”

In the long run Ruest said CN needs to do a better job of competing with trucks.

CN has discarded 5,000 freight cars, returned all leased locomotives, vacated some office space in Montreal, and eliminated 1,300 positions.

CN Adjusts 2019 Outlook in Aftermath of Strike

December 4, 2019

Canadian National has revised its 2019 full-year financial outlook to reflect the effects of an eight-day strike that recently ended.

CN estimates that the strike by members of the Teamsters Canada Rail Conference will affect the company by 15 cents of earnings per share.

The revised full-year financial outlook now calls for adjusted diluted EPS growth in the low-to-mid single-digit range versus last year’s adjusted EPS of CA$5.50.

In October CN had projected an adjusted diluted EPS growth in the high single-digit range for the year.

The strike began when more than 3,000 conductors and rail yard workers walked off the job during contentious negotiations for a new contract.

The union workers are in the process of voting on ratification of the tentative agreement that ended the strike.

CN Revenue Rose 4% in 3rd Quarter

October 24, 2019

Canadian National reported this week that its third quarter 2019 revenue increased 4 percent to CA$3.8 billion.

Diluted earnings per share rose 8 percent to CA$1.66, operating income increased by 8 percent to CA$1.6 million and net income was up 0.5 percent to CA$1.2 billion compared with the third quarter of 2018.

The third quarter 2019 operating ratio was 57.9 percent compared with 59.5 percent a year ago.

“Our team of railroaders swiftly aligned resources with the weaker demand to achieve solid efficiency gains,” said CN President and Chief Executive Officer JJ Ruest in a statement.

“We remain committed to our long-term agenda of growing faster than the economy at low incremental cost, and to taking scheduled railroading to the next level by deploying advanced operating technology.”

In a news release, CN said the revenue growth came from freight rate increases and higher intermodal revenue.

Operating expenses for the quarter were up 1 percent to CA2.2 billion due to higher purchased services and material expenses as well as higher depreciation and amortization expenses.

A slowing demand for rail service led CN to revise its profit outlook for 2019.

It is now projecting adjusted diluted EPS growth in the high single-digit range for 2019 versus last year’s adjusted diluted EPS of CA$5.50.

This past July CN’s financial outlook called for low double-digit growth in adjusted diluted EPS.

The carrier also expects a “slightly negative volume growth” this year in revenue ton miles.

CN said it sees signs of two economies, one of which is a strong consumer sector that’s boosting intermodal and automotive traffic and the other a struggling industrial economy that’s depressing demand for carload freight.

Volume for the third quarter was down 1 percent on a revenue ton-mile basis and by 0.4 percent on a carload basis.

In recent months, CN has responded to softening traffic by reducing its motive power and freight car fleets.

“We’re in process of returning nearly 3,000 railcars that were on lease, scrapping another 2,000 railcars, and have parked over 6,000 cars to saving car hire expense,” said Chief Operating Officer Rob Reilly.

CN has 150 locomotives in storage and will return remaining leased units this quarter.

It has furloughed train and engine crews, as well as mechanical employees.

CN Operating Income, Revenue up in 2nd Quarter

July 25, 2019

Canadian National this week reported that is operating income and revenue both grew during the second quarter of 2019.

Operating income increased by 11 percent to $1.7 billion while revenue grew 9 percent to $3.95 billion.

Earnings per share, adjusted for the impact of one-time items, increased 15 percent to $1.73.

The revenue, operating income, and earnings per share figures were all records.

The operating ratio was 57.5 percent for the quarter, an improvement of 0.7 points.

Traffic volume was up 2 percent with only forest products showing a decline of 8 percent due to mill closures and production reductions in British Columbia.

All other segments were up including 12 percent growth in petroleum and chemicals traffic, a 5 percent increase in coal volume, and a 4 rise in automotive shipments.

Intermodal revenue increased by 15 percent due to CN’s acquisition of TransX, a Canadian trucking company.

“Looking to the balance of this year and next, we are cautiously optimistic,” CEO Jean-Jacques Ruest said during an earnings call. “We have a diverse pipeline of organic growth and line of sight on some market wins ahead of us.”

CN will seek to cut its management ranks by 5 percent by the end of the year. The non-union workforce has fallen by 13 percent since October.

CN Net Income Up 18.4% in 3rd Quarter

October 25, 2018

Canadian National saw its third-quarter net income rise 18.4 percent to CA$1.1 million from CA$958 million in the same quarter a year ago.

Diluted earnings per share increased 21 percent to CA$1.54 over the 2017 third-quarter mark.

Adjusted net income jumped 11 percent to CA$1.1 million, while adjusted diluted EPS climbed 15 percent to CA$1.50.
CN posted a 14 percent increase in third-quarter revenue to CA$3.7 million, which the railroad attributed to higher volumes in the quarter.

Revenue ton-miles were up 4 percent and carloadings were up 3 percent.

In a news release, CN described the quarter’s results as “solid top-line growth with record revenues.”

Revenue rose on a year-over-year basis for petroleum and chemicals by 25 percent; coal, 25 percent; intermodal, 8 percent; and automotive, 3 percent. Revenue rose 15 percent in the categories of grain and fertilizers, forest products, and metals and minerals.

CN attributed the revenue increase primarily to higher applicable fuel surcharges, freight rate increases, the positive translation impact of a weaker Canadian dollar and higher volumes.

Operating income in the quarter rose 8 percent to CA$1.5 million and operating expenses rose 19 percent to CA$2.2 million.

The operating ratio increased 2.3 points during the third quarter to 59.3 percent compared with OR in the third quarter of 2017.

CEO J.J. Ruest said CN sees “strong opportunities ahead, across multiple existing rail commodities and new supply-chain services.”

“The balance of our expansion projects remains on track for completion before winter and our one team is energized to execute our proven operating model as we meet the growing economic needs of our customers,” he said.

CN is seeking a 2018 adjusted diluted EPS in the range of CA$5.30 to CA$5.45, versus last year’s adjusted diluted EPS of CA$4.99.