Intermodal helps drive CN earnings up

CN Monday reported second-quarter results, saying its net income increased from the year-earlier quarter to C$538 million, with earnings per share rising 4% to C$1.18. Excluding a deferred income tax expense, adjusted diluted EPS for the second quarter of 2011 rose to C$1.26.

Revenue for the second quarter was up 8% to C$2.2 billion as carloadings increased 4% and revenue ton-miles rose 5%. Operating income increased 8% to C$874 million. CN’s operating ratio, 61.3%, was essentially in line with the operating ratio of 61.2% for second-quarter 2010.

Claude Mongeau, president and chief executive officer, said: “CN delivered a solid second-quarter performance as a result of continued improvements in freight volumes and strong operational execution. CN railroaders responded quickly and effectively to a series of weather challenges including floods, forest fires, and mudslides. Their tireless efforts and dedication helped to protect the integrity of our network, the reliability of the supply chain we serve, and our service to customers.”

Mongeau said that intermodal—CN’s largest revenue segment—was “a bright spot,” benefiting principally from higher import volumes over the ports of Vancouver and Prince Rupert and increased domestic retail shipments. Total intermodal volumes rose 10% and intermodal revenue increased 14%.

“Intermodal was one of the first areas where we applied our new end-to-end supply chain collaboration approach,” Mongeau said. “This approach is really starting to pay off, and we hope to enjoy gains in other segments of our business where we have brought forward a similar focus on innovation and service excellence.”