(The following story by Chris Sorensen of the Financial Post appeared at Canada.com on January 24.)
OTTAWA — Add fierce coastal storms to the growing list of business challenges vanquished by Canadian National Railway Co.
The country’s largest railway said yesterday it still managed a 16% jump in fourth-quarter profit despite several severe storms on Canada’s West Coast that toppled trees, knocked out power and created serious backlogs at the Port of Vancouver.
“These results were produced with the pretty adverse weather conditions that we experienced in Western Canada, particularly in British Columbia,” Hunter Harrison, chief executive, told analysts during a conference call. “I think it’s the worst weather they’ve experienced in 50 years. We had straight rain, snow in B.C., mudslides, avalanches and ice.”
CN has been dubbed the industry’s top performer by analysts and has previously managed to dazzle investors in the face of everything from hurricanes to soaring fuel prices to high-profile train derailments.
The railway said yesterday it earned $499-million during the fourth quarter, or 95 cents a share, compared with $430-million (78 cents) a year earlier. That included an income tax gain of $27-million, or 5 cents a share.
Mr. Harrison estimated the impact of foul weather on the railway’s earnings per share at “less than a nickel, but more than 3 cents.”
Analysts had expected CN, which yesterday announced a 29% hike in its quarterly dividends, to earn 88 cents a share.
Revenue, meanwhile, rose to $1.94-billion during the period from $1.89-billion a year earlier thanks mainly to strength in coal, grain and fertilizers, petroleum and chemicals, as well as container shipments, CN said.
Claude Mongeau, the railway’s chief financial officer, said CN could boost earnings by 10% this year, provided fuel prices do not exceed expectations. However,
he noted sales could be affected by a slowing economy, fuel-hedging losses and a reduction in the fuel surcharge the railway charges its customers.
CN’s results come as the operator of Vancouver’s biggest container port, Deltaport, is struggling to deal with a backlog of nearly 7,000 containers piled on the docks that is being blamed on the recent foul weather along the B.C. coast.
It’s being called the worst backlog in the operator’s history. That includes a 47-day shutdown in the summer of 2005, when a strike by truckers at the Port of Vancouver cost the Canadian economy an estimated $500-million.
“It has been a very unusual winter,” said Ruth Sol, the president of the Western Transportation Advisory Council, an association of major transportation organizations. “We normally get about four or five storms, but I heard this morning that we’ve already had 18.”
A CN spokesman said earlier this week that the railway has plans to send extra cars to the area, but noted that the backlog is unlikely to be cleared before mid-February.