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CN’s financial results for the second quarter “show a lot of strength,” said President and Chief Executive Officer Claude Mongeau during an earnings teleconference and webcast held this morning.

Total revenue increased 13 percent to $2.5 billion, operating income rose 13 percent to $985 million, net income climbed 17 percent to $631 million, diluted earnings per share jumped 22 percent to $1.44 and CN’s operating ratio remained flat at a robust 61.3 compared with second-quarter 2011 results (all figures are in Canadian dollars). Revenue climbed 22 percent compared with second-quarter 2010. In addition, carloads increased 4 percent to 1.29 million units and revenue ton-miles rose 8 percent to 50.3 million.

“From a service standpoint, an operating standpoint and a financial standpoint, our agenda is working,” said Mongeau. “We had record volume in throughput, [and] record operating and service metrics.”

CN registered revenue growth in every commodity category except grain and fertilizers, which posted a 1 percent decline at $366 million. The revenue gainers were: metals and minerals, up 20 percent to $293 million; petroleum and chemicals, up 19 percent to $405 million; automotive, up 18 percent to $153 million; intermodal, up 16 percent to $526 million; coal, up 15 percent to $187 million; and forest products, up 9 percent to $344 million. The railroad’s export strategy — including more long-haul export moves — helped drive coal business growth, said Executive Vice President and Chief Marketing Officer Jean-Jacques Ruest.

CN also reported 2Q operating expenses totaling $1.56 billion, up 12 percent year over year. Labor and fringe benefit costs climbed 17 percent to $504 million, purchased services and material costs rose 14 percent to $305 million, equipment rent costs increased 9 percent to $59 million and fuel costs went up 7 percent to $379 million.

Taking into account the year’s first half and looking ahead at the second half, 2012 is “lining up to be a good year,” said EVP and Chief Financial Officer Luc Jobin. For the full year, CN is projecting carload growth in the mid-single-digit range and earnings growth in the high single-digit range despite more difficult year-over-year comparisons in the second half, he said. CN is aiming to deliver up to 15 percent adjusted diluted earnings growth versus 2011 even though the Class I is facing a pension expense headwind of about $100 million, said Jobin.

— Jeff Stagl