Canadian National Railway quarterly profit up 19pc to US$648 million

MONTREAL-based Canadian National Railway (CN) has posted a 19 per cent increase in second quarter net profit to C$659 million (US$648 million) year on year, drawn on revenues of C$2.54 billion, up 13 per cent.

"Other than grain and fertilisers, CN registered solid traffic increases in every commodity group during the second quarter - intermodal, automotive, coal, petroleum and chemicals, and metals and minerals business units all registered double-digit gains in revenue ton-miles, with the rise in volumes due in part to economic growth, market share gains, and a labour disruption at a key competitor," said CN president and CEO Claude Mongeau.

The 13 per cent rise in second-quarter revenue mainly resulted from higher freight volumes, due in part to growth in North American and Asian economies. Other factors included increased volumes as a result of a strike at the rival Canadian Pacific Railway, as well as freight rate increases and the impact of higher fuel surcharges and a weaker Canadian dollar.

Intermodal revenues rose 16 per cent, seeing increases for metals and minerals (20 per cent), petroleum and chemicals (19 per cent), automotive (18 per cent), coal (15 per cent), and forest products (nine per cent). But grain and fertilisers revenue declined one per cent.

Revenue ton-miles, measuring the relative weight and distance of rail freight transported, increased eight per cent from the year-earlier period.

Operating expenses for the second quarter increased by 12 per cent to C$1,558 million, mainly due to higher labour and fringe benefits expense, increased fuel costs, the negative translation impact of the weaker Canadian dollar on US-dollar-denominated expenses, as well as more purchased services and material expenses.