Bloomberg News

Canadian National Profit Beats Estimates on Petroleum Shipments

April 22, 2014

Canadian National Railway Co. reported first-quarter profit that beat analysts’ estimates as shipments of petroleum and chemicals increased, offsetting higher weather-related costs such as fuel.

Excluding gains on rail-line sales, Canada’s largest railroad reported profit of C$551 million ($500 million) or 66 cents a share, exceeding the average 62-cent average estimate of analysts. Revenue rose 9.2 percent to C$2.69 billion, beating the C$2.62 billion average estimate.

Canadian National, based in Montreal, joins smaller rival Canadian Pacific Railway Ltd. and U.S. operator Union Pacific Corp. (UNP:US) in overcoming severe weather during the first three months of the year. Increased demand for crude oil and a backlog of grain shipments boosted volume, even as the railway faced higher costs linked to an unseasonably cold winter.

“CN is already best-in-class from an operating ratio point of view,” Cameron Doerksen, an analyst at National Bank Financial, said in a telephone interview from Montreal before the results were released. “The main lever for them to improve margins is more volume-related. They have a fixed asset base, and if you drive more volumes over it you should be able to improve profitability.”

Operating ratio, a widely watched measure of railroad efficiency, deteriorated to 69.6 percent from 68.4 percent a year earlier.

Calgary-based Canadian Pacific today reported quarterly profit that beat analysts’ estimates, buoyed by a decline in benefits and compensation spending. Net income rose 17 percent to C$254 million ($231 million), or C$1.44 a diluted share.

Canadian National, in a statement today, reaffirmed a December forecast that per-share profit in 2014 will increase by at least 10 percent.

The railway boosted its capital expenditure budget for 2014 by 7.1 percent, to about C$2.25 billion, up from a December target of C$2.1 billion.

Canadian National rose 1.4 percent to C$63.86 today in Toronto. The shares have gained 5.4 percent this year, trailing the 6.9 percent increase in Canada’s Standard & Poor’s/TSX Composite Index.

To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net Molly Schuetz, John Lear


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    • $120.39 USD
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