CN Operating Income Up 22% in 2022

Canadian National said on Tuesday that its operating income in 2022 rose 22 percent to $6.8 billion.

CN officials said revenue increased 18 percent, to $17 billion while adjusted earnings per share rose by 25 percent.

The operating ratio was 60 percent, a 1.2-point improvement over 2021, or 59.9 percent on an adjusted basis.

Traffic volume for 2022 was up 1 percent when measured by revenue ton-miles but was down 0.5 percent when measured by carloads.

During the fourth quarter, operating income rose 22 percent, to 1.9 billion with revenue increasing 21 percent, to $4.5 billion.

Earnings per share was up 24 percent, or 23 percent on an adjusted basis. The operating ratio improved 0.4 points to 57.9 percent.

Quarterly volume was up 6 percent on a revenue ton-mile basis, or 2.4 percent on a carload basis.

In looking ahead CN CEO Tracy Robinson said the railroad faces an uncertain outlook for 2023 due to a potential economic downturn.

Speaking during a financial call with investors, Robinson expects freight volume to outperform North American industrial production this year but see a decline of 0.5 percent due to a slowing economy.

CN executives expect bulk traffic such as grain and coal to remain strong through the first half of this year and thus provide a cushion against declines in other traffic.

CN Set Financial Records in 3rd Quarter

Canadian National this week released its third quarter financial results showing record revenue, operating income, and adjusted earnings per share.

Quarterly operating income was up 44 percent to $1.9 billion, revenue rose 26 percent to $4.5 billion, and earnings per share posted a 40 percent gain.

The earnings per share were adjusted for one-time items related to CN’s failed bid to acquire Kansas City Southern.

The operating ratio gained .8 points to an adjusted 57.2 percent. All comparisons are to the third quarter of 2021.

CN is projecting earnings per share to grow around 25 percent, up from its previous forecast of 15 percent to 20 percent.

During an earnings call with investors, CN Chief Operating Officer Rob Reilly said on-time train originations were 87 percent, a 12 percent increase compared with the same quarter of 2021.

Although more trains arrived on schedule during the quarter, CN did not disclose its on-time arrival performance.

Traffic was up 3 percent in the quarter when measured by carloads and containers, or 5 percent based on revenue ton-miles, the preferred metric of Canadian railroads.

CN Reports 2nd Quarter Financial Records

Canadian National reported on Tuesday that its second quarter 2022 performance included record revenue and a record operating income.

In a news release, CN said adjusted diluted earnings per share were a record C$1.93, up 30 percent.

CN said its operational performance improved in key operating metrics such as origin train performance, car velocity, through dwell and record fuel efficiency, resulting in a lower operating ratio.

The news release said revenue was C$4,344 million, an increase of C$746 million or 21 percent

The operating income of C$1,769 million rose 28 percent, and record adjusted operating income of C$1,781 million was an increase of 29 percent.

The operating ratio, defined as operating expenses as a percentage of revenues, was 59.3 percent, an improvement of 2.3-points, and adjusted operating ratio of 59.0 percent, an improvement of 2.6-points.

All percentage changes are comparisons with the second quarter of 2021.

The Montreal-based carrier said it expects approximately a 15-20 percent adjusted diluted earnings per share growth in 2022 while seeking an operating ratio below 60 percent.

CN attributed its higher revenues in the second quarter to higher fuel surcharge rates, freight rate increases, higher Canadian export volumes of coal via west coast ports, higher volumes of U.S. grain and the positive translation impact of a weaker Canadian dollar; partly offset by significantly lower export volumes of Canadian grain.

During an earnings call CN CEO Tracy Robinson said the railroad is performing at its highest levels in five years.

“We’ve leaned in to our scheduled operations, improving train performance and service to customers. And we’re seeing the beginning of improvements in velocity,” Robinson said.

CN executives said during the call that the carrier has hired 850 conductors since the end of 2021.

During the quarter CN said it handled record traffic levels in the U.S., thanks partly to a rise in export grain and coal shipments due to the war in Ukraine.

More information is available at https://www.cn.ca/en/news/2022/07/cn-reports-second-quarter-results/

CN 1st Quarter Revenue up 5%

Canadian National saw its first quarter 2022 revenue rise 5 percent to CA$3.7 billion.

The Montreal-based railroad said adjusted diluted earnings per share were CA$1.32, up 7 percent, compared with first-quarter results in 2021.

Operating income was CA$1.2 billion, down 8 percent, and adjusted operating income of CA$1.2 billion, was up 4 percent.

CN officials said net income was CA$918 million, down from CA$976 million a year ago.

CEO Tracy Robinson in a statement said CN showed resilience in the first quarter in the face of severe winter weather conditions and supply chain disruptions “to deliver solid results.”

CN reported diluted EPS of CA$1.31, down 4 percent. The company posted an operating ratio — defined as operating expenses as a percentage of revenue — of 66.9 percent, an increase of 4.4 points, and adjusted operating ratio of 66.6 percent, an increase of 0.3 points.

The velocity of the system during the quarter, which it also describes as car miles per day, fell by by 12 percent. Fuel efficiency remained flat at 0.910 U.S. gallons of locomotive fuel consumed per 1,000 gross ton miles.

The 5 percent revenue increase reflected strong demand despite reduced revenue ton miles that resulted from a significantly smaller Canadian grain crop, CN officials said.

CN attributed the revenue increase mainly to higher applicable fuel surcharge rates, freight rate increases, higher Canadian export volumes of coal via West Coast ports and higher export volumes of U.S. grain.

Revenue was partly offset by significantly lower export volumes of Canadian grain and lower international container traffic volumes via the ports of Vancouver and Prince Rupert.

Operating expenses for the quarter climbed 12 percent to CA$2.481 million, mainly due to higher fuel costs as well as the recovery of a loss on assets held for sale recorded in Q1 2021.

Due to challenging operating conditions in the quarter as well as worldwide economic uncertainty, CN now expects to deliver a 15 percent to 20 percent adjusted diluted EPS growth, compared to its Jan. 25 target of 20 percent. The company is now targeting an Operating ratio below 60 percent for 2022, compared to its Jan. 25 target of about 57 percent.

CN Reports 4th Quarter Revenue Record

Canadian National said on Tuesday that it recorded a record high $1.6 billion in quarterly operating revenue during the fourth quarter of 2021.

That’s an increase of 11 percent, CN said in a news release, and revenue rose 3 percent to $3.8 billion.

Earnings per share, adjusted for the effect of one-time items, increased 20 percent, to $1.71.

CN said it posted a fourth quarter low operating ratio of 57.9 percent. The operating ratio is the percentage of revenue devoted to operating expenses.

Freight volume fell 10 percent on a carload basis, or 11 percent when measured by revenue ton-miles, the preferred metric of Canadian railroads.

CN CEO Jean-Jacques Ruest said the decline was due to the closure of a mainline in British Columbia due to landslides and a smaller Canadian grain crop.

The affected BC mainline, which CN shares with Canadian Pacific, handled nearly 23 percent of CN’s revenue on any given day, Ruest said.

During 2021, CN said its operating income was up 18 percent to $5.6 billion, Revenue increased 5 percent, to $14.4 billion while earnings per share, adjusted for one-time items, was up 12 percent, to a record $5.94.

The operating ratio for the year was 61.2 percent. CN said it expect the operating ratio in 2022 to be 57 percent. It also is projecting 20 percent growth in earnings per share.

CN Net Income Fell in 1st Quarter

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

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

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

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

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.