CN operations recover from labor disruption

CN yesterday announced its operations have recovered following several months of labor uncertainty as well as a complete shutdown of its Canadian network, and that it is adjusting its 2024 guidance and long-term financial outlook.

CN remains focused on the disciplined execution of its scheduled operating plan, growing volumes more than the economy as its company specific growth opportunities come online, pricing above rail inflation and improving efficiency, CN officials said in a press release.

They attributed the swift network recovery to its scheduled operating plan and steps taken to have an orderly and safe shutdown following the labor stoppage. The labor uncertainty and work stoppage, impact of wildfires in Alberta, weaker-than-expected demand in forest products, and the delayed recovery of overseas intermodal due to on-going port labor uncertainty have all led the company to update its financial guidance and long-term outlook.

The quarter-to-date additional impact of labor uncertainty and and the work stoppage, as well as the wildfires in Alberta, is estimated at around 20 cents of earnings per share (EPS). CN now expects to deliver adjusted diluted EPS growth in the low single-digit range, compared to its July 23 expectation of mid-to-high single-digit growth.

The company continues to expect to invest CA$3.5 billion in its capital program, net of amounts reimbursed by customers. As a result of the reduction to earnings, CN now expects adjusted return on invested capital to be in the 13% to 15% range, compared to its July 23 expectation of 15%.

In light of updated expectations for 2024, and a weaker than expected economic environment, CN is replacing its current financial outlook for the 2024-2026 period with the following: "CN is now targeting compounded annual adjusted diluted EPS growth in the high single digit range," company officials said.