MONTREAL — Canadian National has raised its financial outlook for the year amid record first-quarter intermodal and Canadian grain volumes, and expectations for continued economic improvement that will boost merchandise traffic.
CN now expects volume to grow in the high single-digit percentage range this year, up from around 5% forecast in January, executives said while announcing earnings on Monday. It’s now forecasting double-digit growth in earnings per share, up from between 7% and 9%.
For the first quarter, CN’s results compare favorably to last year, when the railway suffered through weeks of illegal blockades on its tracks, harsh winter weather that shut its main line to Vancouver for several days, and a network slowdown related to a regulatory order that temporarily restricted the speed of trains carrying hazardous materials.
The railway’s quarterly operating income rose 9%, to $1.3 billion, on flat revenue of $3.5 billion. Earnings per share, adjusted for the impact of one-time items, rose 1%, to $1.23.
CN’s operating ratio was 62.5%, a 3.2-point improvement. The adjusted operating ratio was 66.3%, which was 0.6 points higher than a year ago.
CN’s volume rose 7% in the first quarter based on carloads, or 5% when based on revenue ton-miles, the preferred metric of the Canadian railways. “Here at CN, we’re off to a good strong running start,” CEO JJ Ruest told investors and analysts on the railway’s earnings call.
Intermodal revenue ton-miles surged 19%, while grain and fertilizers shipments grew 26% during the quarter. Forest products volume also was strong due to increased housing starts and home renovation projects.
CN’s first quarter volume, based on gross ton miles, was an all-time record, Chief Operating Officer Rob Reilly says.
CN’s operating metrics were mixed, with average train speed declining 1%, terminal dwell holding steady, and car miles per day improving 5%. CN boosted train length by 5% in the quarter, which helped improve fuel efficiency by 4%.
