CN posts ‘strong’ results in Q2

CN yesterday reported second-quarter financial and operating results, including a 13% increase in revenue ton miles (RTMs) year over year and volume growth in virtually every business unit, with notable strength in industrial products, international and domestic intermodal, and propane.

The Class I posted Q2 operating income of CA $1.4 billion, an increase of 76%, or 9% on an adjusted basis, compared with the same period in 2020. Revenue climbed 12% to CA$3.6 billion. Diluted earnings per share (EPS) rose 90% to CA$1.46, and adjusted diluted EPS increased 16% to CA$1.49.

CN attributed the revenue increase mainly to higher volumes across most commodity groups due to the continued economic recovery and freight rate increases; partly offset by the negative translation impact of a stronger Canadian dollar and lower export volumes of Canadian grain.

The railroad reported an operating ratio of 61.6%, an improvement of 13.9 points, or an increase of 1.2 points on an adjusted basis.

"CN continued to deliver strong operating and financial performance in the second quarter, driven in large part by the dedication of our people and the ongoing long-term investments we are making in our network, equipment, technology and talent,” said CN President and Chief Executive Officer JJ Ruest in a press release.

Operating performance improved in Q2 compared to a year ago. In 2020, CN took exceptional measures and made changes to its operating plan — such as through building longer and heavier trains — due to the sharp retreat in volumes and the unknown duration and impact of the pandemic.

As the economy rebounded from the COVID-19 pandemic, CN reverted to its standard operating plan, which focuses on car velocity and through dwell, company officials said.

Operating performance results in the quarter included the following:
• Federal Railroad Association (FRA) injury frequency rate and accident rate improved by 31% and 16%, respectively;
• Fuel efficiency improved by 2% to 0.86 US gallons of locomotive fuel consumed per 1,000 gross ton miles.
• Train length (in feet) decreased by 2%;
• Through dwell (entire railroad, hours) improved by 8%;
• Car velocity (car miles per day) improved by 4%; and
• Through network train speed (mph) decreased by 2%.

Looking ahead, Ruest said the company remains confident that it will obtain the approvals needed to combine with Kansas City Southern.

"Our proposed combination with Kansas City Southern has received overwhelming support from a broad base of stakeholders because it will enhance competition and drive economic growth in North America," he said.