MONTREAL — Strength in bulk traffic and fluid operations propelled Canadian National to first-quarter records for operating income, revenue, and earnings per share.
The strong quarter prompted CN to raise its financial outlook for the year to mid single-digit earnings per share growth, up from its previous guidance of low single-digit growth.
“It’s important to note that our views on the economy haven’t changed. Our current volumes reflect that we are in a mild recession,” CEO Tracy Robinson told investors and analysts on the railway’s earnings call on Monday. “We’re uncertain how deep or how long it will go on. But what we’re modeling is negative North American industrial production for the full year.”
CN won’t furlough train crews during the downturn so that the railway will be ready to handle an eventual rebound in traffic, Robinson says.
To keep crews busy as volume declines and train starts are reduced, CN will take advantage of the lull to train conductors to be engineers, Chief Operating Officer Ed Harris says.
Operating income rose 35%, to a first-quarter record $1.7 billion, as revenue increased 12%, to a first-quarter record $4.3 billion. Earnings per share grew 39% to a first-quarter record $1.82. The railway’s operating ratio improved 5.4 points to 61.5%.
CN’s first-quarter traffic was up 6% when measured by revenue ton-miles, or 1% based on the number of carloads and containers carried. Grain and fertilizers carloads surged 23% due to improved harvests in both Canada and the U.S.
But for the second quarter to date, volume is down 9% when measured by carloads and 5% based on revenue ton-miles as demand for intermodal, petrochemicals, and plastics all softens.
CN’s key performance metrics all improved for the quarter, with train speeds up, terminal dwell down, and car miles per day at its highest level since 2017. On-time train originations were up 39% to 86% compared to a year ago.
