MONTREAL — According to a wire service, Canadian National Railway Co. could see profit growth fall to between 5 and 10 percent this year from the robust 12 percent growth in 2001 because of the uncertain economy, company chief financial officer Claude Mongeau said on Wednesday.
CN, Canada’s largest railway and North America’s No. 5, expects limited growth in the United States this year and only modest improvement in Canada, Mongeau said in a presentation to financial analysts.
“I wish I had a crystal ball here to see through the uncertainty in what is a very difficult environment to call,” Mongeau said.
In Canada, a drought on the Canadian Prairie caused a 25 percent cut in grain shipments and likely a 1 percent drop in CN’s revenues.
CN, whose business is closely tied to the overall state of the economy, sees the North American economy rebounding in the second half of the year, ending 2002 with growth between 0.5 percent and 1 percent.
“Our stance is to be cautious once again, but it is with some trepidation that I’m saying today we are seeing some sign of leveling,” Mongeau said.
Thanks to lower fuel costs and a tax rate cut, Mongeau said CN’s operating ratio, already the best of all North American railroads, should further improve in 2002.
The Montreal-based railroad also said the continuing cost controls and integration of Wisconsin Central Transportation Corp. will help drive profit growth.
For 2001, CN’s net profit crested the C$1 billion mark or C$5.23 a share, compared with C$937 million or C$4.67 a share in 2000. Annual revenues rose to C$5.7 billion from C$5.4 billion and the operating ratio improved 2.2 percent to 66.1 percent.
CN stock shot up more than 4 percent in morning trading before the analysts presentation. It later lost some gains to trade at C$74.89, up C$1.64. In New York, the stock advanced $1.28 at $46.68.
J.P. Morgan Securities maintained its “buy” recommendation on the stock in the face of stronger than expected fourth- quarter results due to the robust cross-border commodities traffic, cost-cutting and the acquisition of Wisconsin Central.