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Canadian National Railway Co. has posted the lowest quarterly and annual operating ratios in the railroad's history, and set annual operating income, net income and free-cash flow records.

Yesterday, the Class I reported fourth-quarter revenue of $1.7 billion, a 15 percent increase compared with fourth-quarter 2003. Quarterly net income rose 24 percent to $376 million, operating income increased 19 percent to $607 million and the railroad's operating ratio improved 1.1 points to 65. However, quarterly operating expenses rose 13 percent to $1.1 billion.

"CN’s performance resulted from strong core business growth at low incremental cost, the early benefits of two acquisitions and the
discipline of precision railroading," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "This winning combination allowed CN to generate free cash flow of more than $1 billion."

CN's acquisition of BC Rail Ltd. and Great Lakes Transportation L.L.C.'s holdings last year added $145 million to fourth-quarter revenue

For full-year 2004, CN increased revenue 11 percent to $6.5 billion, boosted net income 20 percent to $1.25 billion, increased operating income 22 percent to $2.2 billion and improved its operating ratio 2.9 points to 66.9 compared with 2003. The lone negative: annual operating expenses, which rose 7 percent to $2.1 billion.