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The first Class I out of the gate with its quarterly financial results has set a rapid pace for year-over-year revenue growth and operating ratio improvement. Yesterday, Canadian National Railway Co. reported first-quarter revenue of $1.7 billion and operating income of $526 million, a 19 percent and 33 percent increase, respectively, compared with first-quarter 2004.

Metals and minerals, forest products, intermodal, coal, petroleum and chemicals, and grain and fertilizers revenue rose 49 percent, 26 percent, 26 percent, 18 percent, 10 percent and 8 percent, respectively, compared with the same 2004 period.

The railroad’s quarterly net income increased 45 percent to $299 million, free cash flow rose 15 percent to $310 million and operating ratio improved 3.3 points to 69.2.

CN officials only had a few things to gripe about. Quarterly operating expenses of $1.2 billion rose 13 percent compared with first-quarter 2004 because of $96 million in expenses tied to the Great Lakes Transportation L.L.C. and BC Rail Ltd. acquisitions, and higher labor, benefits and fuel costs. And the continued appreciation of the Canadian dollar reduced quarterly revenue, operating income and net income by $60 million, $25 million and $15 million, respectively.

“[The results] were all the more striking given a severe winter and weather-related disruptions on parts of our network early in the quarter,” said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "Our performance was driven by a number of factors — a solid economy, revenue gains from 2004 acquisitions, a higher fuel surcharge, freight rate increases and a return to more normal traffic levels following the first-quarter 2004 Canadian Auto Workers strike.”