MONTREAL — Canadian National reported record fourth-quarter financial results on Tuesday, despite the impact of severe flooding that shut its main line through southern British Columbia for three weeks.
CN’s “Full Speed Ahead” plan to improve the company’s financial results, announced in September amid a proxy contest launched by activist investor TCI Fund Management, gained momentum in the quarter.
CN reported a record low fourth-quarter adjusted operating ratio of 57.9%, a 3.5-point improvement compared to a year ago. Operating income increased 11%, to a fourth quarter record $1.6 billion, as revenue grew 3%, to $3.8 billion. Earnings per share, adjusted for the impact of one-time items, surged 20%, to $1.71.
The railway’s key operating metrics, including average train speed and terminal dwell, also improved during the quarter. Car-miles per day declined 3%, however.
CN’s volume declined 10% on a carload basis, or 11% when measured by revenue ton-miles, the preferred metric of the Canadian railways. Ruest attributed the decline to the British Columbia main line closure and a smaller Canadian grain crop.
The directional running zone in British Columbia, which is shared with Canadian Pacific, typically handles 21% to 23% of CN’s revenue on any given day, Ruest says.
For the year, CN’s operating income rose 18%, to $5.6 billion, as revenue grew 5%, to $14.4 billion. Earnings per share, adjusted for one-time items, was up 12%, to a record $5.94. The operating ratio improved 4.2 points to 61.2%.
CN also posted all-time records for fuel efficiency and its lowest rate of personal injuries.
CN expects to record a 57% operating ratio this year, along with 20% growth in earnings per share.
