CN books lower first-quarter grain handle

Higher revenue per carload offset reduced grain and fertilizer traffic for Canadian National Railway (CN) in its first fiscal quarter.

Montreal-based CN on Monday reported overall net income of $792 million on total revenues of $2.964 billion for the quarter ending March 31, up from $704 million on $3.098 billion in the year-earlier Q1.

The company moved about 146,000 carloads of grain and fertilizers in the quarter, down from 154,000 in the year-earlier period, for grain and fertilizer revenue of $522 million, down from $535 million, but for revenue per carload of $3,575, up from $3,474.

The company, in a release Monday, attributed its lower handle to reduced U.S. grain exports via the Gulf of Mexico.

CN CEO Claude Mongeau hailed the overall results as a “very solid quarterly performance in a challenging economic environment.”

The railway, he said, “successfully aligned our resources with the reduced volume level to achieve strong efficiency gains, while continuing to offer superior customer service and significantly improving our safety performance.”

Revenues increased from the railway’s automotive, forest products and intermodal sectors but also dropped in the petroleum/chemicals, metals/minerals and coal sectors. Overall carloadings for the quarter were down seven per cent at 1,255,000.

The company was able to bring its operating ratio (OR) for the quarter to 58.9 per cent, a 6.8-point improvement over the year-earlier period and equal to the quarterly OR reported last week by CN’s Calgary rival, Canadian Pacific Railway (CP).

The OR, a ratio of operating expenses to net sales, is cited within business sectors as a measure of a specific company’s relative efficiency in that sector.

However, CN on Monday also warned “weaker than expected freight demand in certain markets” and the loonie’s recent show of strength against the U.S. dollar have prompted a downward revision for the company’s 2016 financial outlook.

CN has now cut its outlook for earnings per share (EPS) in 2016 to $4.44 — roughly in line with last year’s adjusted EPS and down from the mid-single-digit EPS growth projected in its Jan. 26 outlook. — AGCanada.com Network

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