(Dow Jones Newswires circulated the following story by Mike Barris on January 22.)
NEW YORK — Canadian National Railway Co. (CNI) posted a 67% jump in fourth-quarter net income, aided by gains from a tax adjustment and the sales of its Montreal station complex and stake in English Welsh and Scottish Railway.
The largest Canadian railroad by revenue reported net income of C$833 million, or C$1.68 a share, compared with C$499 million, or 95 Canadian cents a share, a year earlier.
The latest quarter included gains of 57 Canadian cents a share from a deferred income tax recovery, 13 Canadian cents a share from the sale of its Central Station Complex, and 8 cents a share from the sale of its investment in English Welsh and Scottish Railway. Year-ago results included a tax-related gain of C$27 million, or 5 Canadian cents a share.
Excluding items, Canadian National said it would have reported earnings of 90 Canadian cents a share, flat with the year-ago period.
Revenue fell to C$1.94 billion from C$2 billion.
Analysts surveyed by Thomson Financial had expected the Montreal-based company to report fourth-quarter earnings, excluding Items, of 88 Canadian cents a share.
Revenue ton-miles rose 3%. Total rail freight revenue per revenue ton-mile fell 6%. Carloads rose 5.1%, amid a demand slump that has hit freight companies in general.
Canadian National has been hit hard by the housing-market downturn because the U.S. housing market is one of the biggest drivers of forest products, accounting for nearly a quarter of the company’s revenue. In the latest quarter, forest- products revenue fell 19%. Although Canadian National had said in July it expected its fourth-quarter results – generally one of the strongest periods for the railroad – to show a healthy rebound, it tempered its optimism by September, due to the continuing housing-market slump.
Average fuel price in the latest quarter rose to $2.70 from $2.16 a year earlier.
The strong Canadian dollar affected the conversion of the company’s U.S. dollar-denominated revenue and expenses, reducing net income by about C$25 million, or 5 Canadian cents a share.
Earlier Tuesday, CSX Corp. (CSX) kicked off the fourth-quarter earnings season for railroad operators, posting a 5.2% rise in net income as revenue growth more than made up for record fuel prices. CSX also reaffirmed its long-term outlook for double-digit growth in operating income and earnings per-share.
Norfolk Southern Corp. (NSC) is expected to report results later Tuesday.
In after-hours trading, Canadian National shares fell to $43.68 from the Tuesday close of $43.76.