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They weren’t stellar, but they weren’t shabby either. Yesterday, Canadian National Railway Co. reported second-quarter financial results, which were slightly hampered by severe weather and economic softening.

The railroad generated quarterly revenue of $1.9 billion, a 1 percent increase compared with second-quarter 2006. Revenue ton-miles declined 1 percent but freight revenue per revenue ton-mile increased 3 percent primarily because of rate increases, an improving traffic mix, and volume growth in petroleum, chemicals and automotive.

In addition, quarterly net income totaled $493 million, a 29 percent drop compared with second-quarter 2006 net income, which included a deferred income tax recovery of $241 million resulting from a lower federal corporate tax rate. Excluding the deferred income tax recoveries for both years, adjusted second-quarter net income rose 7 percent.

Meanwhile, operating income increased 1 percent to $781 million, the railroad’s operating ratio worsened 0.2 points to a still industry leading 60.0 and operating expenses rose 2 percent to $1.1 billion compared with second-quarter 2006. Increased equipment rents, fuel, and purchased services and material expenses were partially offset by lower casualty, labor and fringe benefit costs, as well as a stronger Canadian dollar.

“CN performed well in light of a number of market-related and operational challenges in the second quarter, including the shutdown of our line to Prince Rupert as a result of a June flood, ongoing weakness in the forest-products sector and two illegal blockades of our Toronto-to-Montreal mainline,” said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement.

The railroad posted similar results for the first half. CN generated revenue of $3.8 billion, a 1 percent increase compared with first-half 2006.

Adjusted net income (excluding deferred income tax recoveries) rose 1 percent to $780 million but operating income fell 4 percent to $1.3 billion. CN estimates a United Transportation Union-Canada strike in the first quarter reduced first-half net income and operating income by $34 million and $48 million, respectively.

In addition, first-half operating expenses increased 4 percent to $2.5 billion and CN’s operating ratio worsened 1.8 points to 65.1.