(The following Reuters article by Francois Desjardins was posted on April 15.)
MONTREAL — Canadian National Railway Co., which cut 5 percent of its workforce after last year’s severe drought in Western Canada slashed grain shipments, said on Tuesday its 2003 profit growth would once again hinge on weather conditions.
Grain transport revenues suffered last year as the Prairies were hit by their second drought-plagued summer in a row and crop yields dropped to their lowest levels in decades. But CNR, Canada’s largest railway and the No. 5 in North America, said moisture levels this year were showing positive signs.
“It depends on grain. The first half of the year will be relatively flat, and in the second half we’re looking for growth across the board in everything but grain, in the 3, 4 or 5 percent levels,” said Hunter Harrison, chief executive of the Montreal-based railway.
“If we take a hit like we did (in 2002), that would kind of camouflage the growth overall,” said Harrison.
“Despite of the fact it’s not the most robust economic conditions, the other parts of the business are going relatively well,” Harrison added.
“We have not seen a slowdown in the U.S., with one exception, there has been a little slowdown in the auto sector, which we were anticipating.”
CN Rail also said it did not exclude further acquisitions to fuel growth, though these would have to be strategic.
“We’ve made a proposal to buy Ontario Northland Rail. We’re hopeful of hearing a response from the province to our offer in the next week or so,” Harrison said without giving details on the offer.
He also addressed speculation that BC Rail, Canada’s third-largest railway, will eventually be put up for sale by the British Columbia government.
“We’ll certainly be an active player there. We think we do a pretty good job with railroads, if there’s a railroad for sale, and it’s the right price, chances are we’ll take a look.”
Shares of CNR were up 45 Canadian cents at C$65.90 on Tuesday on the Toronto Stock Exchange and up 55 cents at $45.51 on the New York Stock Exchange (news – web sites).
The company held its annual shareholders meeting on Tuesday morning in Montreal.