(The Canadian Press circulated the following story on April 23.)
MONTREAL — Canadian National Railway Co. suffered an eight per cent decline in first-quarter operating profit as revenue slipped one per cent while expenses increased two per cent.
Canada’s largest railway said Wednesday that an accounting change worth $48 million after taxes increased net income to $252 million, $1.28 per share. This was up from $230 million, $1.15 per share in the first three months of 2002.
The $48-million after-tax bookkeeping benefit came from a change in accounting for track removal costs.
Excluding this item, first-quarter net income was $204 million or $1.04 per share, down 11 per cent from a year ago.
Operating income was $374 million. Revenue slipped to $1.5 billion and expenses grew to $1.12 billion. CN’s operating ratio – costs as a proportion of revenue – rose to 75 per cent from 73.1 per cent.
Hunter Harrison, CN’s president and chief executive officer, said his debut quarter as CEO was “marked by major challenges: harsh weather – the second-coldest Canadian winter in 20 years – which caused congestion and additional operating and maintenance expenses; higher fuel costs; and continued weakness in bulk commodities traffic, largely because of reduced Canadian grain volumes.”
He credited “solid cost control” with limiting the increase in operating expenses to two per cent despite weather-related costs and a 13 per cent rise in spending on fuel.
Canada’s largest railway “continues to be cautious about economic prospects for the remainder of 2003,” Harrison added.
“Economic growth has slowed in the last six months, largely reflecting hesitant consumer spending in the United States. This situation could persist in the near term.”