(Morningstar.ca published the following Reuters article on January 21.)
MONTREAL — Fourth-quarter profit at Canadian National Railway Co. fell sharply because of charges linked to layoffs and asbestos-related personal injury claims, CNR said on Tuesday.
But CNR, Canada’s largest railroad and North America’s fifth-largest, steamed ahead with a 16 percent dividend hike, increasing its quarterly dividend to 25 Canadian cents a share.
The railway said it earned C$22 million ($14 million), or 11 Canadian cents a share, in the quarter, down from C$296 million, or C$1.48 a share, in the year-earlier period.
Fourth-quarter profit was hit by layoff charges of C$79 million, or 39 Canadian cents a share, linked to a 5 percent cut in its workforce in Canada and the United States, or 1,146 jobs.
Another C$173 million of charges, or 86 Canadian cents a share, stem from an accounting change concerning asbestos-related and other personal injury claims.
Excluding the charges, CNR said it earned C$274 million, or C$1.36 a share, in line with the average forecast of C$1.38 a share by four analysts polled by Thomson First Call.
Revenues in the quarter were C$1.55 billion, up from C$1.54 billion in the year-before period.
The railway said four of its seven business units increased their revenues during the quarter. Intermodal revenues advanced 16 percent, petroleum and chemicals rose 11 percent, forest products 4 percent and automotive 3 percent. Grain revenues fell 21 percent in the quarter, while metals and minerals were down 2 percent.
The Montreal-based railway, seen as one of North America’s most efficient, saw its operating ratio — how much it has to spend to produce a dollar of revenues — deteriorate to 68.3 percent from 66.1 percent in the year earlier period.
The company reduced its locomotive fleet of 2,200 by a third during the year as it is putting in place scheduled rail service.
CN stock ended down C$1.15 Canadian cents at C$61.22 on the Toronto Stock Exchange on Tuesday and down $1.12 at $39.90 in New York.
The stock has lost 10 percent over the last year, underperforming Canadian Pacific Railway, which lost less than 1 percent over the same period.