(Dow Jones Newswires circulated the following on April 21, 2009.)
MONTREAL — Canadian National Railway Co. (CNI) reported higher first-quarter earnings, boosted by gains, though revenue fell on lower volumes in the quarter.
The Montreal railway company earned C$424 million or 90 Canadian cents a share, compared with year-earlier earnings of C$311 million or 64 Canadian cents a share.
The latest results include a net gain of C$122 million or 26 Canadian cents, largely due to a gain on the sale of a railway corridor to GO Transit, while last year’s were reduced by C$11 million or 2 Canadian cents a share as a result of a deferred income-tax recovery.
In the latest quarter, the company also recorded costs related to its acquisition of the principal rail lines of the Elgin, Joliet and Eastern Railway Co. and a gain related to a deferred income tax recovery. Excluding all these items, Canadian National earned C$302 million or 64 Canadian cents a share.
The Thomson Reuters analyst mean estimate for Canadian National’s first-quarter earnings was 61 Canadian cents a share.
Earlier in April, Canadian National said it would raise C$160 million by selling a portion of its track to commuter train operator GO Transit. The deal bolsters its balance sheet and allows the railroad to focus on key assets.
Revenue declined 4% to C$1.86 billion from C$1.93 billion a year earlier. Analysts had expected revenue of C$1.82 billion in the latest quarter. The company attributed the decline mainly to “significantly lower volumes in almost all markets as a result of current economic conditions in the North American and global economies, as well as a lower fuel surcharge resulting from year-over-year decreases in applicable fuel prices and reduced volumes.”
Lower volumes had hurt the railway in the fourth quarter too, though the effect was offset by the decline in the Canadian dollar and fuel surcharges.
The railway’s first-quarter operating ratio rose to 74.1% from 72.9% a year earlier. The operating ratio is the percentage of operating revenue consumed by operating expenses, so a decrease represents an improvement.
The company didn’t provide guidance for 2009, noting that while economic conditions remain uncertain, it’s focused on growth opportunities “that extend beyond the business cycle.”
Monday in Toronto, Canadian National closed at C$48.78, down 4.6%.