CN revenues up 7% in 3Q

Canadian National reaffirmed full-year financial estimates on third-quarter revenue that was 7% higher and earnings that were essentially unchanged.

Net income for the Montreal-based company decreased by 1% to C$958 million, while diluted EPS increased by 2% to C$1.27. Adjusted net income increased by 2% to C$989 million, with adjusted diluted EPS increasing by 5% to C$1.31. Operating income increased by 4% to C$1,459 million. Revenues increased by 7% to C$3.22 billion.

Revenue ton-miles increased by 10% and carloadings by 11%. Operating expenses increased by 10% to C$1.76 billion. The operating ratio increased 1.4 points to 54.7%.

“CN delivered strong third-quarter financial results as we continued to see increased demand across key business segments such as frac sand, intermodal, coal and Canadian grain,” said Luc Jobin, president and chief executive. “I’m proud of what our team has accomplished given the strength and speed of the volume growth we’ve experienced this year.

“To meet the needs of an expanding North American economy and new growth opportunities, we are increasing investments in our infrastructure and equipment by C$100 million, for a total capital program of C$2.7 billion in 2017. During the third quarter, and continuing through the rest of the year, we’ve been hiring across our network, particularly in Western Canada, as we remain focused on delivering superior service to our customers.”

The company reaffirmed its previous earnings guidance for 2017 C$4.95-5.10 per share, up from adjusted diluted EPS of C$4.59 in 2016.

Third-quarter revenues increased on-year for metals and minerals, 31%; coal, 23%; intermodal, 12%, and, automotive, 4%. Declines were seen in forest products, 2%, and grain and fertilizers, 1%. Petroleum and chemicals revenues remained essentially flat.

Revenue gains were spurred by higher volumes in overseas intermodal, frac sand, coal and petroleum coke exports, and Canadian grain; freight rate increases; and higher fuel surcharges, partly offset by the stronger Canadian dollar.

Higher operating expenses were due to higher costs from increased volumes and higher fuel prices.