The Canadian National executive train passed through Michigan on Thursday as the railroad’s new CEO Tracy Robinson took to the rails to look at the system.
The train originated in Toronto at the Brampton Intermodal Terminal and was expected to arrive in Chicago Thursday afternoon, Trains magazine reported on its website.
The train had two CN freight locomotives and four passenger cars.
Robinson assumed the CEO post on Feb. 28, replacing the retiring Jean-Jacques Ruest.
Tracy Robinson has been named the new president and chief executive officer of Canadian National.
She will assume her new posts on Feb. 28 upon the retirement of CEO Jean-Jacques Ruest.
Robinson is currently with TC Energy where she holds the position of executive vice president and serves as president of TC divisions Canadian Natural Gas Pipelines, and Coastal GasLink.
She has been with TC Energy since 2014. Previously Robinson worked for 27 years in executive positions in operations, commercial and finance at Canadian Pacific.
Ruest, who has been at CN for 25 years, announced his retirement last year pending the appointment of his replacement.
“She knows the railroad,” Ruest said during a conference call with investors on Tuesday. “She knows the network. She knows the competition. She’s passionate about railroading. In my view, she is a railroader.”
Ruest said Robinson’s experience in the energy industry will help CN tap into the ongoing energy boom in Western Canada, including the development of hydrogen and growth in the petrochemical sector.
Robinson earned a master’s degree from the University of Pennsylvania’s Wharton School of Business and holds a Bachelor of Commerce Degree from the University of Saskatchewan.
The Globe and Mail of Toronto reported that Robinson has pledged to learn to speak French.
The newspaper said this was a bid to avoid the type of controversy that ensnared Air Canada CEO Michael Rousseau after he gave a speech last year in Montreal in English and was unable to speak with reporters in French.
Robinson said she wants to be able to communicate better with CN’s francophone employees.
In a related development, CN and one of its large shareholders, TCI Fund Management, have settled their differences and the hedge fund will drop its proxy contest.
TCI had sought to name is own slate of company directors and top executives after becoming disenchanted with CN’s financial and stock performance. TCI also had been critical of CN’s failed effort to acquire Kansas City Southern last year.
CN and TCI have agreed to collaborate on the naming of two independent directors to the CN board to be appointed by the time of CN’s annual meeting this year.
In the meantime, CN said it has named former politician Jean Charest as an independent director. Current CN board member Shauneen Bruder was named vice-chair of the board.
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.
A hedge fund seeking to take control of top management of Canadian National wants the Montreal-based Class 1 to delay naming a replacement for its retiring CEO until after a shareholder meeting next March.
TCI Fund Management has put forth a slate of four nominees for seats on the CN board of directors who will be voted upon during the March 22 meeting.
However, TCI’s preferred choice to become CEO, Jim Vena, recently withdrew his name from consideration.
Current CEO J.J. Ruest plans to retire in January after a new CEO is named.
TCI has been critical of CN management this year for its handling of an unsuccessful effort to acquire Kansas City Southern.
That bid collapsed in the face of opposition from the U.S. Transportation Board.
CN rival Canadian Pacific was subsequently able to reach agreement to acquire KCS.
The two expect to merge next year pending approval by the STB.
Canadian National indicated this week it expects to name a new CEO next month.
The Montreal-based Class 1 railroad is working with consulting firm Korn Ferry to review potential suitors for the job.
The new CEO will replace J.J. Ruest who this past October announced his retirement plans. Ruest plans to step down after a new CEO is named.
One candidate who will not be considered for the CN CEO position is Jim Vena, a former Union Pacific executive who had been pushed for the position by an activist investment firm that is seeking to oust the current CN management team
Vena, who had been supported by TCI Fund Management, informed the CN search committee reviewing CEO candidate that he is no longer interested in the position.
Vena had interviewed several times with the committee for the post. In addition to his work for UP, Vena also once worked as a CN manager, including serving as chief operating officer. He held the same position at UP until January 2021.
Canadian National CEO Jean-Jacques Ruest will retire in January.
In a news release, CN said Ruest had deferred discussing his retirement plans in order to see through the proposed merger with Kansas City Southern, which was called off after the U.S. Surface Transportation Board rejected CN’s request to place KCS stock in a voting trust while regulators reviewed the merger.
The news release said CN would conduct a global search for a new CEO and that Ruest might stay on in his post beyond January if need be until a new CEO is hired.
Ruest has worked for CN for more than 25 years and been CEO since 2018.
In an unrelated development, CN said it earned during the third quarter of 2021 revenue of CA$3.6 billion, up 5 percent from the same period a year ago; operating income of CA$1.34 billion, up 2 percent; adjusted operating income of CA$1.5 billion, up 8 percent.
Diluted earnings per share were CA$2.37, up 72 percent while adjusted diluted earnings per share were CA$152, an increase of 10 percent.
The operating ratio improved 2.8 points to 62.7 percent. The adjusted operating ratio of 59 percent was a gain of 0.9 points.
CN said operating income and operating ratio were affected by transaction-related costs for the unsuccessful bid to acquire KCS.
Canadian National is fighting back against by an activist investment firm seeking to change the railroad’s management.
TCI Fund Management wants to replace CN CEO J.J. Ruest, Chairman Robert Pace and name five new members of the CN board of directors.
Late last week CN said TCI’s claims about CN finances are “false or misleading.” It also said TCI has yet to acknowledge that it is a leading shareholder in Canadian Pacific, one of CN’s chief competitors.
CN said TCI has yet to offer a credible plan to create value for shareholders.
“CN has announced an ambitious strategic plan to deliver immediate and long-term shareholder value, while retaining our commitment to safety, customer service and the communities we serve. This plan builds on the investments we have made in technology and capacity over the past three years to drive long-term sustainable growth in total revenues and operating margins,” Ruest said in a statement referencing the Full Speed Ahead plan to reduce CN’s operating ratio, cut capital spending, and increase shareholder returns through a combination of earnings growth and share buybacks.
TCI has dismissed the Full Speed Ahead plan and raised questions about whether CN management could successfully follow through on its goals.Based in London, TCI holds $4 billion in CN stock.
An activist hedge fund had requested a special meeting of the shareholders of Canadian National in an effort to shake up the board of director’s composition.
TCI Fund Management has named four individuals it will nominate for the railroad’s board of directors.
“We did not seek a proxy fight but without urgent action CN’s operational and financial performance will continue to lag its peers under a board that lacks the right railroad experience and operational expertise,” said Chris Hohn, TCI founder and managing partner in a statement.
CN said in its own statement that it knows about the TCI request but has yet to receive the formal requisition. The railroad said that once it does, it will review it and comment further.
Hohn has called for replacing CN Chairman Robert Pace and ousting CEO J.J. Ruest. He also wants CN to drop its bid to acquire Kansas City Southern.
CN is CN’s second-largest investor. It has proposed naming to the CN board Allison Landry, a former transportation analyst at Credit Suisse who is currently a board member of XPO Logistics; Rob Knight, who was chief financial officer at Union Pacific for 15 years before retiring in 2019; Paul Miller, a Canadian Nation executive from 1978 to 2011, retiring as vice president of safety, sustainability, and network transportation; and Gilbert Lamphere, a former CN and Illinois Central board member.
They would replace current board members Pace, Kevin Lynch, James O’Connor, and Laura Stein.
An activist hedge fund that controls more than 5 percent of stock in Canadian National said it will press other investors to support a call to replace the railroad’s top management.
A partner in TCI Fund Management told a Toronto newspaper that his firm has been speaking with other large investors who are likewise disenchanted with CN management.
TCI began demanding the resignation of CN CEO J.J. Ruest and Chairman Robert Pace after the U.S. Surface Transportation Board rejected a plan by CN to place Kansas City Southern into a voting trust as a first step toward acquiring KCS.
Walker told the Globe and Mail that the next steps toward replacing Ruest and Pace will hinge on what other shareholders do.
TCI is the second-largest CN stockholder and also holds a large share of stock in Canadian Pacific.
Canadian National said this week that its posted gains in second-quarter earnings and traffic, with nearly every traffic category growing in volume.
CN managers during an earning call said the results reflected a recovery from the COVID-19 pandemic-induced downtown.
Operating income skyrocketed by 76 percent, to $1.38 billion, as revenue grew 12 percent, to $3.6 billion.
Adjusted for the impact of one-time items, earnings per share increased 16 percent, to $1.46. The operating ratio was 61.6 percent, down from 75.5 percent a year ago but up 1.2 points when last year’s second quarter is adjusted for the impact of one-time items.
On a carload basis, overall volume was up 14 percent. It was up by 13 percent when measured by revenue ton-miles, the preferred metric of Canadian railroads.
The strongest traffic growth occurred in industrial products, intermodal, and propane traffic.
“Our results reflect broad-based trends and forward momentum across all of our business, and also the enduring power of our vast and diversified CN network,” CEO J.J. Ruest said.
CN said its terminal dwell and car miles per day improved, while average train speed was down 2 percent, to 19.5 mph.
The Montreal-based carrier set a quarterly record for fuel efficiency and posted a record low employee personal injury rate. The train accident rate also declined.
CN continues to say that its outlook for the remainder of the year will be high single-digit volume growth and double-digit growth in earnings per share.
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