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Canadian National Railway Co.’s Class I-best operating ratio got even better in the fourth quarter. The railroad’s 61.8 ratio improved 3.2 points compared with fourth-quarter 2004.

CN had a banner quarter in other financial measures, as well. Revenue of $1.6 billion rose 9 percent — despite the impact of the stronger Canadian dollar on U.S. dollar-denominated revenue — net income of $373 million increased 14 percent, operating income of $625 million went up 19 percent and diluted earnings of $1.35 per share rose 21 percent compared with fourth-quarter 2004. Quarterly operating expenses increased only 3 percent to $1 billion.

“CN’s strong financial results for the fourth quarter … reflect disciplined execution by the CN team and its ability to overcome some major challenges during the year,” said President and Chief Executive Officer E. Hunter Harrison in a prepared statement. “All the pieces came together – stronger pricing, gains from our acquisitions and solid returns from good service, cost control and improved productivity.”

During 2005, CN’s revenue rose 11 percent to $6.3 billion compared with 2004 primarily because of rate increases associated with higher fuel surcharges. Annual net income of $1.4 billion went up 24 percent, operating income of $2.3 billion increased 21 percent, diluted earnings of $4.80 per share increased 28 percent and CN’s 2005 operating ratio of 63.8 improved 3.1 points compared with 2004.

Annual operating expenses rose 5 percent to $4 billion primarily because of higher fuel, purchased services and material costs, and the inclusion of full-year expenses from former Great Lakes Transportation properties and BC Rail Ltd., which the Class I acquired in mid-2004.