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Rail News: Financials

2Q: CN's 61.2 operating ratio sets quarterly record


A strong second quarter finished off a banner first half for Canadian National Railway Co. Yesterday, the Class I reported quarterly net and operating income of $416 million and $713 million, a 28 percent and 24 percent increase, respectively, compared with second-quarter 2004.

CN’s second-quarter operating ratio of 61.2 set a quarterly record and bested second-quarter 2004’s ratio by one point. Quarterly revenue rose 10 percent to $1.8 billion.

However, second-quarter operating expenses of $1.1 billion increased 3 percent compared with the same 2004 period primarily because of rising fuel costs, and the inclusion of Great Lakes Transportation L.L.C.’s and BC Rail Ltd.’s expenses. In addition, the strong Canadian dollar reduced CN’s quarterly net income about $15 million.

During the year’s first half, the railroad’s revenue totaling $3.5 billion rose 14 percent compared with the same 2004 period. Net and operating income increased 34 percent and 28 percent to $715 million and $1.2 billion, respectively. And CN’s first-half operating ratio of 65.0 improved 3.7 points compared with first-half 2004.

Fuel costs again were a major factor in driving up operating expenses, which increased 8 percent to $2.3 billion during the first half. The strong Canadian dollar decreased first-half net income about $30 million.

“CN had a terrific quarter and first half, demonstrating once again the power of the company’s business model — precision railroading and the pursuit of profitable, sustainable growth — along with the strength of our freight franchise,” said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement.

CN also announced plans to purchase up to 16 million — or 6 percent — of its common shares between July 25, 2005, and July 24, 2006. The railroad recently completed a stock buy-back program under which CN bought 14 million common shares.

Contact Progressive Railroading editorial staff.

More News from 7/21/2005