CN posts lower revenue in Q3, as volumes slow due to pandemic

CN yesterday reported third-quarter 2020 revenue fell 11% to CA$3.4 billion compared with the same period a year ago due to lower volumes across most commodity groups.

The Class I reported Q3 diluted earnings per share of CA$1.38, down 17%, and operating income of CA$1.4 billion, down 15%. CN posted an operating ratio of 59.9%, up from 57.9% in Q3 2019.

CN officials in a press release said Q3 volumes were down because of the pandemic as well as lower applicable fuel surcharge rates, partly offset by freight rate increases and increased shipments of Canadian grain. Revenue ton miles (RTMs), which measure the relative weight and distance of freight transported by CN, declined 7%, and freight revenue per RTM fell 3%.

Volumes in RTMs did improve sequentially in each month of the quarter and September volumes increased on a year-over-year basis, which reflected demand for certain commodities in line with 2019 levels, CN officials said.

Operating expenses were CA$2 billion, an 8% decrease driven mainly by lower fuel and labor costs, as well as by decreased purchased services and material expense.

"As we look at the fourth quarter and beyond, we continue to see sequential improvements and momentum leading us to have a cautious optimism about the future," said President and Chief Executive Officer JJ Ruest.