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CN’s second-quarter financial results were “really good” and provided further evidence that the “economic recovery is taking hold,” said President and Chief Executive Officer Claude Mongeau during an earnings webcast and teleconference held yesterday afternoon.

Diluted earnings per share soared 38 percent to $1.09, operating income jumped 39 percent to $784 million, volume increased 27 percent to 1.2 million units, revenue rose 18 percent to $2 billion and CN’s operating ratio improved 6.1 points to an industry best 61.2 compared with second-quarter 2009 figures. Analysts polled by Thomson Reuters had expected earning of 95 cents and revenue around $2 billion.

Coal revenue jumped 40 percent to $150 million, automotive revenue leaped 39 percent to $123 million, metals/minerals revenue soared 33 percent to $202 million, intermodal revenue rose 25 percent to $384 million, petroleum/chemicals revenue increased 6 percent to $317 million, forest products revenue also went up 6 percent to $288 million and grain/fertilizers revenue was flat at $320 million.

CN made strides with improving velocity and fluidity, and focusing on shipments’ first and last mile, achieving something the Class I characterizes as “deeper customer engagement,” said Mongeau.

“Results were anchored on careful planning — having the right resources in place at the right time — improved customer service and our team's strong execution of the Precision Railroading model,” he said. “This is the second quarter we’re reporting as a new executive team and we’re firing on all cylinders.”

Quarterly expenses rose only 7 percent to $1.25 billion, with the increase largely driven by a 38 percent jump in fuel costs to $231 million, said Executive Vice President and Chief Financial Officer Luc Jobin. Labor and fringe benefit costs were essentially flat and purchased services/material costs dropped 1 percent.

Through the first half, CN took advantage of the stronger-than-expected economic recovery to build business while operations continued to improve, said Mongeau. One of the results: CN’s first-half operating ratio improved 4 points year over year to 65.1.

“We will continue to seize opportunities going forward by supporting our customers in improving the efficiency of their supply chains to help sustain their competitiveness in end markets,” said Mongeau.

— Jeff Stagl