(Canada.com posted the following Canadian Press story by Allan Swift on April 16.)
MONTREAL — Canadian National Railway is interested in buying BC Rail if the British Columbia government puts Canada’s third-largest railway on the market, CN’s chief executive said Tuesday.
Hunter Harrison said this is among several acquisitions the cash-rich company is pursuing to continue its growth strategy. “We’re good at running a railroad and if there is one for sale we’ll certainly be there,” Harrison said after the company’s annual meeting. B.C.’s Liberal government is developing a request for proposals to operate BC Rail, a resource-based railway with 2,315 kilometres of mainline track. The province would remain owner of the rail bed.
Harrison also said he expects a response from the Ontario government within a week on CN’s bid for the Ontario Northland Railway.
CN was selected by Ontario last fall to negotiate a deal to buy the regional carrier, which operates freight and passenger services along 1,100 kilometres of track.
“I’m determined to see this organization grow,” Harrison told his first annual meeting since being promoted to the CEO position with the departure of Paul Tellier to Bombardier last December.
However, Kansas City Southern, a CN partner and one of the few sizable railways left in North America, “is not in my sights,” he said.
If CN could grow by expanding its current operations and through acquisitions, Harrison said he is willing to let the operating ratio, a key measure of efficiency, slip a couple of points. CN’s operating ratio – expenses as a proportion of revenue – was the best in the industry last year at 69.4 per cent, which Harrison said beat the industry average by 13 points.
Despite his vow to expand, Harrison expects no growth in the first half of this year due to continued low grain shipments as a result of last year’s drought-shrivelled harvest on parts of the Canadian Prairies.
For the second half, CN predicts growth in all areas except Canadian grain and coal.
“This is going to be another tough year,” said Harrison. “The big kicker is grain. If grain bounces back, we’ll look forward to a pretty good rest of the year.”
CN’s grain revenues fell by $225 million last year as a result of the drought, and the company laid off 1,150 employees in November to compensate.
CN stock (TSX:CNR) gained $1.51 to $66.96 on the Toronto Stock Exchange Tuesday.
Former TD Bank chairman and CEO Charles Baillie was elected to the CN board at the annual meeting. Also joining the board was Hugh Bolton, chairman of Epcor Utilities and former chairman of accountancy firm Coopers & Lybrand Canada.
Baillie and Bolton replaced Tellier and Cedric Ritchie, who retired from the board.