(The following article by Nicolas Van Praet was posted on the Montreal Gazette website on October 22.)
MONTREAL — Canadian National Railway Co. mistakenly issued its earnings a day early yesterday, reporting an increase in net profit of 10 per cent for the latest quarter even as revenues fell.
CN was forced to issue its quarterly results early yesterday after it mistakenly included third-quarter profit information in a routine filing with the U.S. Securities and Exchange Commission. CN originally meant to issue its results today before market opened.
The company sent the SEC a press release about its purchase of two smaller U.S. railways. It erroneously put the headline of the financial results press release on the body of the acquisition press release.
“It was a human error,” said CN spokesperson Mark Hallman. “It was a material one. And we took steps to immediately disclose the full results.”
Investors are supposed to receive information about a company at the same time. An official with the Ontario Securities Exchange Commission said CN appears to have done the right thing in broadly reporting its results after noticing the error.
CN chief executive Hunter Harrison called the error “a lack of attention to detail” caused by outside counsel.
CN, North America’s fifth largest railroad, beat the average forecasts by analysts for its latest quarter by 19 cents.
The company said earnings came in at $294 million, or $1.53 a share, for the three months ended Sept.30. That’s up from $268 million, or $1.32 a share, in the same period last year.
CN made profit gains even as its revenue dropped from $1.5 billion to $1.4 billion. The stronger Canadian dollar also cost the railway $14 million. Montreal-based CN collects as much as 60 per cent of its sales in U.S. dollars. The value of those sales drops as the Canadian dollar rises. The railway increased its container revenue for the quarter. It also benefited from tax adjustments totalling $30 million and significant savings on operating costs.
“I think the results clearly reflect that the business model is working,” Harrison said during a conference call with an analysts. “I’m delighted.”
CN’s Canadian grain shipments have finally recovered after two years of drought, the company said. Intermodal activity, in which the railway transports truck containers, rose. Meanwhile, auto shipments and coal traffic fell.
The railway also indicated yesterday it will file a preliminary prospectus with U.S. and Canadian securities regulators to issue up to $1 billion of corporate debt.
CN said it largely solved the traffic clog-up at its Brampton intermodal facilitity in Ontario. A series of events, including high volumes and the blackout in August, piled up containers there.