CN posts higher profits in Q4, full year 2015

Despite an 8 percent decline in carloadings for the fourth-quarter, CN reported its fourth-quarter 2015 net income rose 11 percent to $941 million and diluted earnings per share (EPS) rose 15 percent to $1.18 (in Canadian dollars), the Class I announced yesterday.

The quarterly profit beat analysts' expectations. The railroad's operating income rose 7 percent to $1.354 billion, and the operating ratio decreased 3.5 points to 57.2 percent compared with the year-ago quarter, according to a CN press release, which reported all figures in Canadian dollars.

However, revenue fell 1 percent to $3.166 billion for the fourth quarter, while revenue ton-miles declined 5 percent.

For the full year, CN's net income jumped 12 percent to $3.538 billion, with diluted earnings per share of $4.39, up 14 percent compared with 2014's profit. Operating income rose 14 percent to $5.266 billion. Revenue climbed 4 percent to $12.61 billion, even though the company's carloadings dropped 2 percent and revenue ton-miles fell 3 percent for the full year.

CN's full-year operating ratio improved by 3.7 points to 58.2 percent.

"CN generated strong fourth-quarter and full-year 2015 results despite the weak volume environment," said President and Chief Executive Officer Claude Mongeau, who recently returned to work from a medical leave. "Our solid performance is testament to the strength of CN's franchise and diversified portfolio of businesses. I am particularly proud that CN's team of railroaders quickly recalibrated resources to respond to weaker volumes, while protecting customer service."

The earnings report marked Mongeau's return after he temporarily stepped down from CN's day-to-day operations in mid-August 2015 for treatment of a non-cancerous tumor in his larynx.

In 2016, CN will face a challenging economic environment but will "continue to leverage its franchise strength and industry-leading efficiency," he said.

"For 2016, the company expects to deliver mid-single digit EPS growth over adjusted diluted 2015 EPS of $4.44," said Mongeau. "CN will continue to invest in the safety and efficiency of its network, with a 2016 capital investment program of approximately $2.9 billion, including the negative impact of foreign exchange and increased spending for positive train control technology."