CN posts record profit, up 9.07pc to US$2.7 billion, sales up 10pc

THE Canadian National Railway has posted a 9.07 per cent increase in 2012 net profit to C$2.68 billion (US$2.7 billion) year on year, drawn on revenues of C$9.92 billion, up 10 per cent.

Fourth quarter operating profit increased 10 per cent to C$922 million year on year while full-year operating income rose 12 per cent to C$3.68 billion. Fourth quarter net income increased to C$610 million.

Revenues for the fourth quarter rose by seven per cent to C$2.53 billion. As of year-end, free cash flow totalled C$1.006 billion, after voluntary pension plan contributions of C$700 million were paid, resulting in a year-on-year decline of C$1.1 billion.

Petroleum and chemical transport revenue went up 15 per cent, as did coal; metals and minerals generated 13 per cent more sales while intermodal revenues were up 11 per cent; automotive was up 11 per cent, forest products up five per cent and grain and fertilisers up four per cent.

Revenue increases were attributed to higher freight volumes. The railway said this was "due to growth in North American and Asian economies, and the company's performance" above market conditions in a number of segments, as well as increased volumes in the second quarter as a result of a labour disruption at rival Canadian Pacific.

The impact of a higher fuel surcharges helped as did the weakness of the Canadian dollar vis-a-vis the greenback.

"CN's growth last year continued to outpace that of the overall economy, generating the highest volumes and earnings in company history," said CN president and CEO Claude Mongeau.

"In 2012, we experienced strong growth in commodities related to oil and gas, particularly crude oil, and saw continued market share gains in overseas and domestic intermodal. CN also benefited from strong coal and petroleum coke exports, increased wheat and soybean exports, as well as higher lumber and panels shipments to the United States," he said.

"For 2013, CN anticipates continued gradual improvement in the economy and further growth opportunities in intermodal, energy and other resource markets. Despite the challenge of an approximate C$150 million headwind related to increased pension expenses and the impact of depreciation studies, CN is aiming for high single-digit growth in 2013," Mr Mongeau said.