Canadian National Railway Reports Higher Profits

Canadian National Railway Co. on Monday reported higher first-quarter profits after revenues fell amid a deepening commodity rout.

The Montreal-based railway operator, Canada's biggest, said it earned $792 million Canadian dollars ($625 billion), ​or C$1.00 a share, in its first quarter, up from C$704 million, or 86 Canadian cents a share, a year earlier. Results beat the 93 Canadian cents analysts polled by Thomson Reuters expected.

CN's revenue of C$2.96 billion was down 4% from a year earlier. Analysts had been expecting C$3.02 billion. The decline reflected weaker demand for energy-related freight, which prompted the company to lower its guidance for 2016. CN said it now expects earnings to remain flat at about C$4.44 in 2016, matching its adjusted 2015 earnings.

The company attributed the revenue slide to decreased shipments of commodities such as crude oil, sand for fracking, drilling pipe and reduced demand for coal. CN said falling demand was offset by the weaker Canadian dollar and freight weight increases.

Results for North America's major railroads have been mixed this quarter as shipping volumes continued to be pressured by slumping commodity prices. Last week, CN's smaller rival Canadian Pacific Railway Ltd. reported better-than-expected first-quarter earnings amid cost controls and operating efficiencies, as did former CP takeover target Norfolk Southern Corp. Union Pacific Corp., however, reported a 15% drop in quarterly profit due to weak freight demand.

CN said its operating ratio, a key measure of railway performance, improved to 58.9%, down 6.8 points from a year earlier. Operating ratio is the percentage of operating revenue consumed by operating costs, so a decline indicates improvement.

Write to Jacquie McNish at [e-mail]

(END) Dow Jones Newswires

April 25, 2016 17:55 ET (21:55 GMT)

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