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Today, Canadian National Railway Co. announced some banner financial results for the second quarter. The Class I earned record net income of $326 million — a 34 percent increase compared with second-quarter 2003 — and dropped its operating ratio 4.6 points to 65.5.

CN also reported quarterly revenue of $1.6 billion and operating income of $575 million, a 14 percent and 32 percent rise, respectively, compared with last year's figures.

However, quarterly expenses of $1 billion rose 6 percent because of $43 million tied to the Great Lakes Transportation L.L.C. acquisition, and higher labor, fringe benefits and casualty costs. Also, the stronger Canadian dollar vs. the U.S. dollar reduced CN's second-quarter revenue, operating income and net income about $30 million, $15 million, and $10 million, respectively.

"Our strong quarterly results reflected a comeback in Canadian grain traffic,
market share gains as a result of good service, yield improvement initiatives, and improved profitability resulting from CN’s Intermodal Excellence strategy," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "The fluidity of our network, coupled with solid operating efficiencies and productivity advances … positioned the company superbly to handle a 10 percent increase in second-quarter freight volume at low incremental cost. This allowed us to deliver our revenue gains directly to the bottom line."

During the year's first six months, CN earned net income of $536 million compared with $496 million during a similar 2003 period. First-half free-cash flow of $587 million rose 68 percent compared with last year's $350 million.

Also, CN increased first-half revenue and operating income 5 percent and 20 percent, respectively, to $3.1 billion and $970 million, and reduced operating expenses 1 percent to $2.1 billion compared with last year's data.
The Class I's first-half operating ratio of 68.7 improved 3.9 points.

However, the stronger Canadian dollar reduced revenue, operating income and net income about $150 million, $55 million and $30 million, respectively.