advertisement

---

Canadian National Railway Co. continues to raise the bar on its financial performance. Today, the Class I reported record third-quarter revenue of $1.7 billion — despite a stronger Canadian dollar — a 30 percent increase in operating income, 18 percent rise in net income and a 2.5-point improvement in its quarterly operating ratio to 65.4 compared with third-quarter 2003. Operating and net income totaled $591 million and $346 million, respectively.

All seven CN business units registered revenue gains, led by metals and minerals (up 56 percent), forest products (up 25 percent) and coal (up 25 percent).

"Our success is built on solid railroading execution, a strong merchandise traffic base, productivity and pricing discipline, and a proven ability to leverage new acquisitions," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "Third-quarter revenues grew 21 percent, reflecting core business growth in a strong North American economy and the acquisitions of BC Rail, and the railroad and related holdings of Great Lakes Transportation (GLT)."

CN's quarterly operating expenses rose 17 percent to $1.1 billion compared with last year primarily because the railroad reported $93 million of GLT- and BC Rail-related expenses, and paid more for fuel, labor and fringe benefits, and services. The stronger Canadian dollar reduced CN's quarterly revenue, operating income and net income by about $45 million, $15 million and $7 million, respectively.

During the year's first nine months, CN increased revenue 10 percent to $4.8 billion; operating income, 23 percent to $1.6 billion; and net income, 12 percent to $882 million compared with similar 2003 data. The railroad also improved its operating ratio 3.5 points to 67.6. However, operating expenses rose 5 percent to $3.3 billion.

The stronger Canadian dollar reduced CN's nine-month revenue, operating income and net income by about $195 million, $70 million and $37 million, respectively.

"I am particularly proud of our nine-month free cash flow of $754 million," said Harrison. "This cash generation ability is one of CN’s key strengths, giving [us] financial flexibility."