OTTAWA– Canadian National Railway Co. yesterday reported a 14-per-cent increase in first-quarter profit, excluding a one-time gain from early 2001, primarily because of last year’s acquisition of Wisconsin Central Transport Corp., the Globe and Mail reports.
CN’s profit for the three months ended March 31 was $230-million or $1.19 a share, compared with a profit of $275-million or $1.44 a year earlier. But last year’s profit included a one-time gain from the sale of CN’s 50-per-cent interest in the Detroit River Tunnel Company, which resulted in an after-tax gain of $73-million.
Revenue for the quarter was $1.5-billion, up 8 per cent from $1.4-billion a year earlier.
CN president and chief executive officer, Paul Tellier, referred to the results as “another solid performance.”
“The acquisition of Wisconsin Central — part of CN’s growth strategy — again demonstrated shareholder value as it drove the improvement in CN’s financial results,” Mr. Tellier said.
CN noted that if last year’s results had included the Wisconsin Central acquisition, CN would have posted a first-quarter profit last year of $282-million or $1.47 a share, on revenue of $1.536-billion.
“But our first-quarter performance reflects more than the inclusion of WC revenues — CN’s automotive, forest products and petroleum chemicals units all registered solid revenue growth.”
Revenue from petroleum and chemicals was up 9 per cent. Revenue was up 7 per cent in automotive; 5 per cent for forest products and 4 per cent for coal.
Revenue from intermodal shipments, in which goods are transported by trucks and rail, was down 1 per cent. Revenue was down 9 per cent from grain and fertilizers and 14 per cent from metals and minerals.
“The merchandise business has been very good whereas the bulk business has been very weak,” Mr. Tellier said.
The railway’s operating ratio — the key measure of efficiency in the industry — edged up to 73.1 per cent from 72.5 per cent. The lower the operating ratio, the better.
In a conference call with reporters yesterday, Mr. Tellier said costs increased more than revenue in the quarter because of an increase in labour expenses and casualty claims.
He said it is a temporary situation and will not be repeated in subsequent quarters.
Mr. Tellier said that while most economists are expecting economic growth of between 2? and 3 per cent in North America this year, CN is more conservative in its model.
“We tend to be cautious and undercommit. We are reasonably confident but we remain cautious because this is a difficult economy to read.”
Results were released after markets closed yesterday. CN shares closed up 27 cents yesterday at $80.12 on the Toronto Stock Exchange.