Lower volumes from Canadian National Railway’s (CN) grain and fertilizer business helped drag down the company’s bottom line for fiscal 2009.
Montreal-based CN on Tuesday reported net income of $1.854 billion on $7.367 billion in revenues for the year ending Dec. 31, down from $1.895 billion on $8.482 billion in 2008.
Amid its 2009 results, grain and fertilizer revenues dropped three per cent, to $1.341 billion. Grain and fertilizer carloads for the year dropped eight per cent to 530,000, translating to a six per cent increase in grain and fertilizer revenue per carload, to $2.53 billion.
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“CN overcame a number of challenges during the fourth quarter, ranging from weather and operational disruptions in Western Canada to a five-day strike by locomotive engineers in Canada,” CEO Claude Mongeau said in the company’s release, also noting pressure from the stronger Canadian dollar.
“Despite these challenges, the final quarter of 2009 saw continued sequential improvement in CN’s traffic levels and an easing in year-over-year volume comparisons. Carloadings were flat year-over-year, but up four per cent versus the third quarter of 2009.”
CN reported fourth-quarter (Q4) net income of $582 million on $1.882 billion in revenues, up from $573 million on $2.2 billion in the year-earlier period.
CN also noted its Q4 ledger overall includes an after-tax gain of $59 million on the sale of a rail line to Toronto transit agency Metrolinx, as well as a deferred income tax recovery of $99 million.
Improved metrics
But grain and fertilizers was among several sectors of CN’s freight business to show Q4 growth in volume hauled compared to the year-earlier period. CN’s petroleum and chemicals, automotive and coal sectors also saw growth in Q4 carloads “as the economic recovery began taking hold,” the company said.
Grain and fertilizer carloads in Q4 rose three per cent to 147,000, although Q4 revenue from that sector dropped seven per cent to $356 million, for revenue per carload of $2,422, a nine per cent drop from the year-earlier period.
“As we go forward, we will build on the improvements in operating metrics we achieved in 2009, including train velocity, lower freight car dwell times in terminals, and improved locomotive fuel efficiency,” Mongeau said.
CN on Tuesday also announced its board has approved a bid to purchase, for cancellation, up to 3.2 per cent of its common shares outstanding at Jan. 18.
CN’s share purchase “represents an appropriate use of its funds to increase shareholder value,” the company said. “Having a strong balance sheet and solid cash generation, CN can undertake the offer while continuing to pursue other opportunities.”
