Canada’s biggest railway operator, based in Montreal, said shifting freight demand led to lower volumes in a variety of shipping lines including crude, coal, and intermodal. But it said it continued to achieve record operating ratio numbers in the third-quarter, as it improved productivity and costs.
CN also provided an update to its outlook for the year, saying adjusted diluted earnings per share for the current fiscal year should rise 1%, compared with previous expectations of no growth made back in April.
“Despite shifting traffic demands, including a delayed Canadian grain harvest, we remained flexible and service-focused,” said Luc Jobin, CN’s president and chief executive.
CN earned 972 million Canadian dollars ($728 million), or C$1.25 a share, down from C$1.01 billion, or C$1.26 a year earlier. The results beat the C$1.22 a share analysts polled by FactSet were expecting.
Revenue fell 6% to C$3.01 billion, compared with C$3.08 billion analysts were projecting.
The railway’s operating expenses fell 7% to C$1.61 billion mainly because of lower costs resulting from decreased volumes of traffic and cost-management practices. Its operating ratio improved to 53.3% from 53.8%. Since the operating ratio is the percentage of operating revenue consumed by operating costs, a decline indicates an improvement.
CN’s smaller peer and main rival, Canadian Pacific Railway Ltd. (CP), reported third-quarter results last Wednesday. It posted a lower-than-expected profit of C$347 million, or C$2.34 a share, reflecting delayed grain harvest and a slump in commodity prices hampered shipping volumes.
