CN Rail on track for 2015 after solid Q3

MONTREAL Canadian National Railway says it remains on track to deliver double-digit earnings growth for the year as net earnings surged 18 per cent in the third quarter despite lower volumes shipped.

The country’s largest railway beat expectations as it reported more than $1 billion in profits in the three months ended Sept. 30, up from $853 million a year earlier. Its diluted earnings per share rose 21 per to $1.26 from $1.04.

Revenues grew three per cent to $3.22 billion despite a six per cent decrease in volume measured by carloadings and revenue ton-miles. It benefited from a lower Canadian dollar.

Excluding currency fluctuations, net income would have decreased by $107 million or 13 cents per share, the company said in its earnings report issued Tuesday after markets closed.

CN had been expected to earn $1.14 per share on $3.2 billion of revenue, according to analysts polled by Thomson Reuters.

The Montreal-based company said its operating ratio improved to a record 53.8 per cent from 58.8 per cent in the third quarter of 2014. Operating ratio is a measure of efficiency in which a lower number is better.

“We continue to be confident in terms of CN’s prospects for the year, notwithstanding the fact that we’re experiencing weaker conditions than expected in some markets,” executive vice-president Luc Jobin said during a conference call.

“As we look to the future, North American economic conditions are favourable, consumer confidence remains solid and should support continued progress in housing, automotive and intermodal segments.”

He said the railway is expecting a two per cent decrease in volume for the year but pricing is on track to exceed inflation. The railway reaffirmed its outlook for double-digit adjusted EPS growth in 2015.