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RAIL EMPLOYMENT & NOTICES



Rail News Home Canadian National Railway - CN

4/27/2021



Rail News: Canadian National Railway - CN

CN posts lower net income, flat revenue in Q1


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CN yesterday reported first-quarter 2021 net income fell 3.7% to CA$974 million, or $1.37 per diluted share, from CA$1.01 billion, or $1.42 per diluted share, in the same period a year ago.

The Class I’s total revenue of CA$3.5 billion for the quarter was "in line" with Q1 2020, CN officials said in a press release. Operating income rose 9% to CA$1.3 billion, but adjusted operating income of CA$1.2 billion was down 2%.

CN executives described the company’s Q1 results as "solid," and included an "industry-leading" year-over-year increase in traffic volume of 5%.

CN posted an operating ratio (OR) of 62.5% and an adjusted OR of 66.3% for the quarter. A year ago, the railroad logged an OR and adjusted OR of 65.7%.

Operating performance improved in Q1 2021 when compared to the same period in 2020, mainly due to the partial economic recovery and reduced impacts of the COVID-19 pandemic as well as political blockades that occurred in 2020.

Record Q1 intermodal traffic and shipments of Canadian grain, and freight rate increases were offset by lower volumes for other commodity groups caused mainly by the ongoing effects of the COVID-19 pandemic, the negative translation impact of a stronger Canadian dollar and lower applicable fuel surcharge rates. The unfavorable revenue impact of the polar vortex in February 2021 was similar in magnitude to the unfavorable revenue impact of the illegal blockades in February 2020.

Also during Q1, CN reported its Federal Railroad Association personal injury and accident rates decreased by 27% and 36%, respectively; fuel efficiency improved 4% to 0.92 U.S. gallons of locomotive fuel consumed per 1,000 gross ton miles; train length (in feet) increased 5%; through dwell (entire railroad, hours) remained flat; car velocity (car miles per day) increased 5%; and through network train speed (mph) decreased 1%.

The company updated its 2021 financial outlook and is now targeting double-digit adjusted diluted earnings per share growth.

"Gains in safety, train length, car velocity, labor productivity, fuel efficiency and other key measures demonstrate our strong operational performance," said CN President and Chief Executive Officer JJ Ruest. "Our proposal to combine with Kansas City Southern will drive value to KCS and CN shareholders and significantly enhance customer choice and competition, while further reducing greenhouse gas emissions by converting truck to rail."

Last week, CN announced it would compete with Canadian Pacific to acquire KCS in a cash-and-stock transaction valued at $33.7 billion, or $325 per share. The proposal followed the CP and KCS announcement in March that they had agreed to a merger agreement in which CP would acquire KCS in a stock and cash transaction valued at $275 per KCS share.

Meanwhile, CN announced yesterday it submitted a letter to the Surface Transportation Board (STB) outlining its proposed union with KCS. The letter states that CN submitted its voting trust formally to the STB in Docket No. 36514. And in a separate filing in the same docket, CN filed 409 statements in support of its proposed combination with KCS.



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