SASKATOON, Sask. — The prairie drought will take a big bite out of Canadian National Railway’s 2002 profits, the company has warned investors.
The Western Producer reports that CN president Paul Tellier said last week the “catastrophic” reduction in this year’s crop will have a major impact on the company’s bottom line.
“We are faced with two bad crop years in a row, which has significantly reduced the amount of product we can move,” he said in a news release.
The company said its growth in earnings-per-share for 2002 will be at the low end of the five-10 percent range that it had previously announced.
While it didn’t specify an exact amount, that forecast growth rate is based on the company’s 2001 earnings of $4.92 per share.
Tellier said while the company’s general merchandise and intermodal business remains strong, grain volumes are worse than anticipated.
CN’s revenue from grain hauling is expected to be down by around $170 million.
Last year grain revenues totalled $1.16 billion, accounting for about 20 percent of total revenues.
In a report published last week, J.P. Morgan Securities Inc. reduced its estimate of CN’s 2002 year-end share value by five cents to $3.40 US, reflecting what it called “a continuing weak Canadian grain volume outlook and increasingly tough cost comparisons.”