CN posts record Q2 earnings, revenue, income

CN yesterday reported that it achieved record earnings, revenue and operating income for the second quarter.

Second-quarter revenue rose 9 percent to CA$3.96 billion over the year-ago period mainly due to the inclusion of The TransX Group in the intermodal commodity group, the impact of a weaker Canadian dollar, freight rate increases and higher petroleum crude and grain volumes, company officials said in a press release.

Diluted earnings per share in the quarter increased 6 percent to CA$1.88 and adjusted diluted EPS climbed 15 percent to CA$1.73. Operating income in the quarter jumped 11 percent to CA$1.68 billion.

CN posted an operating ratio of 57.5 percent, an improvement of 0.7 points compared with Q2 2018.

"The CN team delivered record second-quarter results, and we remain optimistic on CN's volume prospects in the second half of the year while maintaining our vigilance on costs,” said President and Chief Executive Officer JJ Ruest. “Our focus on delivering profitable growth and advanced technologies to modernize our scheduled railroading model is expected to continue driving long-term value creation for our shareholders.”

CN still aims to deliver 2019 adjusted diluted EPS growth in the low double-digit range this year versus last year's adjusted diluted EPS of CA$5.50 and continues to assume mid single-digit volume growth in 2019 in terms of revenue ton miles (RTMs), company officials said.

RTMs, which measure the relative weight and distance of freight transported by CN, rose 2 percent from the year-earlier period. Freight revenue per RTM increased by 8 percent over the year-earlier period, mainly driven by the inclusion of TransX, the positive translation impact of a weaker Canadian dollar and freight rate increases.

Operating expenses climbed 8 percent to CA$2.3 billion, primarily due to the inclusion of TransX, the negative translation impact of a weaker Canadian dollar and higher costs resulting from higher traffic volume.

CN announced earlier this year that it completed its acquisition of TransX one of Canada's largest and oldest transportation firms.