January 27, 2012

 

Canadian National Railway posts record gross income

 

 

Canadian National Railway's (CN) gets higher returns from grain and fertiliser handling which boosted record gross revenues in both its Q4 and fiscal 2011.

 

CN on Tuesday (Jan 24) reported US$2.457 billion in total net income on record revenues of US$9.028 billion for fiscal 2011, up from US$2.104 billion profit on US$8.297 billion in fiscal 2010.

 

Profit for Montreal-based CN's fourth quarter (Q4) ending December 31 rose to US$592 million on record revenues of US$2.377 billion, up from US$503 million on US$2.117 billion in the year-earlier period.

 

"Our broad-based service innovation benefited our customers and enabled us to grow our business faster than the overall economy and close the year with record carloadings and revenues," CN CEO Claude Mongeau said in a release.

 

Operating expenses for the year rose 8.7% to US$5.732 billion - particularly in fuel, up 34.7% at US$1.412 billion, though the company said its increased revenues also include a higher fuel surcharge.

 

Revenues from CN's grain and fertiliser business segment totalled US$1.523 billion in fiscal 2011, up 7% from US$1.418 billion in the previous year. Q4 grain and fertiliser revenues were up 3% at US$413 million.

 

Grain and fertiliser carloads for the year, however, were up just 2% at 592,000, making for revenue per carload of US$2,573, up 5%. Q4 grain and fertiliser carloads in fact dropped 7% to 152,000, for revenue per carload of US$2,717, up 11% from the year-earlier period.

 

"Although the economic recovery may be affected by global uncertainty, CN believes the gradual improvement in the North American economy will continue in 2012," Mongeau said.

 

"Despite significant headwinds from additional pension expense of about US$120 million in 2012, CN is aiming to achieve a growth of up to 10% in diluted earnings per share (EPS) over adjusted diluted EPS of US$4.84 for 2011."

 

CN said its outlook for the coming year assumes 2012-13 grain crops in both Canada and the US will be "in line with five-year averages."

 

As for the 2011-12 crop, US corn and soy production is slightly below - and exports are projected to be significantly below - the prior year's crop, CN said. Canadian 2011-12 grain production and export forecasts are moderately above the prior year's crop, the company added.

 

With those assumptions among others, CN said it would target total carload growth in the "mid-single digit range, along with continued pricing improvement above inflation."

 

CN's outlook also assumes a Canadian-US exchange rate to be "around parity for 2012," and that the price of crude oil (West Texas Intermediate) for the year will be in the range of US$100 per barrel.

 

CN said it plans to invest about US$1.75 billion in capital programmes, of which over US$1 billion is to be targeted on track infrastructure.