(Bloomberg News circulated the following story by Hugo Miller on October 21.)
NEW YORK — Canadian National Railway Ltd., the country’s largest railroad, said third-quarter profit rose 14 percent as the company charged more to deliver coal, metals and minerals.
Net income climbed to C$552 million ($455 million), or C$1.16 a share, from C$485 million, or 96 cents, a year earlier, the Montreal-based company said today in a statement. Revenue increased 12 percent to C$2.26 billion.
Canadian National avoided a third straight quarterly profit decline as stronger demand for coal and metals outweighed a drop for lumber and slow growth for autos amid the U.S. housing slump and weaker consumer spending. The stronger U.S. dollar also increased the value in Canadian currency of revenue from the U.S.
“Looking forward, the uncertain economic landscape in North America and around the world will pose challenges to CN and its customers,” Chief Executive Officer Hunter Harrison said in the statement. In the third quarter, “we enjoyed good revenue growth across most commodity groups,” he said.
Sales rose 41 percent to C$140 million from coal shipments and 29 percent to C$269 million from metals and minerals. That helped overcome a 2 percent drop, to C$383 million, from deliveries of lumber and forest products and an increase of just 3 percent, to C$117 million, for automotive-products shipments.
Excluding a gain of 9 cents a share for deferred income-tax adjustments, profit would have been C$1.07 a share, the company said. The average was C$1.02 for 22 analyst estimates compiled by Bloomberg.
`Tailwind’
The decline in oil prices and strengthening U.S. dollar “obviously give us benefits,” Chief Financial Officer Claude Mongeau told analysts on a conference call. “It could be as much as a dime in earnings per share in terms of a tailwind.”
The price of crude oil has tumbled 52 percent since reaching an intraday record of $147.27 on July 11, and the Canadian dollar has lost 14 percent against the U.S. dollar this month. The railroad gets about a third of its revenue from the U.S.
“Business through October is holding up,” even with the recent stock-market volatility and slowing U.S. economy, Mongeau said.
Canadian National fell C$1.51 to C$48.14 at 4:19 p.m. in Toronto Stock Exchange trading, before the results were released. The shares have risen 3.2 percent this year.
The company’s planned $300 million acquisition of the Elgin, Joliet & Eastern Railway Co., which has tracks in the Chicago area, should be completed by the end of the year, Harrison said on the conference call.
The transaction is being considered by the U.S. Surface Transportation Board and may face additional scrutiny if a bill proposed by the U.S. House transportation committee in September becomes law. The acquisition includes a planned expansion of the EJ&E to ease congestion, which has triggered opposition in some Chicago suburbs that would see more trains.
“I am hopeful we will get the transaction done by year- end,” Harrison said. “I think the momentum has swung a little bit back in our favor.”