Reuters — Canadian National Railway (CN) CEO Luc Jobin stepped down abruptly on Monday, as the board looks to “energize” the railroad’s leadership amid a major supply crunch that has hurt profits and angered customers.
“The board believes the company needs a leader who will energize the team, realize CN’s corporate vision and take the company forward,” chairman Robert Pace said in a statement.
Once considered the standard for railway efficiency, CN has struggled recently with capacity constraints that have crimped its ability to meet the strong demand to transport crude-by-rail to U.S. Gulf Coast refiners.
Jobin’s departure comes less than a month after Halliburton, the third-largest U.S. oilfield services company, blamed CN for delays in frack sand supply.
Canada’s grain sector has also complained of significant delays, with farmer groups last week pressing for federal legislation allowing penalties on railways for subpar service.
The Ag Transport Coalition, a Prairie grain shippers’ group, on Friday reported grain week 30 as “the poorest order fulfillment performance to date” during 2017-18, with CN supplying just 17 per cent of cars ordered.
CN, Canada’s largest railroad, on Monday appointed chief marketing officer Jean-Jacques Ruest as interim CEO. Ruest has been with the company for 22 years, and the board said he is well known to customers and investors.
Cowen and Co. analysts said despite picking a veteran like Ruest, the surprise announcement along with CN’s existing operational issues would keep “near-term” pressure on its shares.
While the company’s shares have risen nearly 30 per cent since Jobin took the helm in July 2016, they are down 6.4 per cent this year. That compares with a 1.7 percent fall in smaller rival Canadian Pacific Railway’s shares.
CN, which has missed profit expectations in the past two quarters, reaffirmed its full-year 2018 adjusted profit and spending targets.
— Reporting for Reuters by John Benny in Bangalore; includes files from AGCanada.com Network staff.