Lower U.S. taxes help lift CN Rail’s profits

MONTREAL Canadian National Railway Co. is raising its quarterly dividend 10 per cent as it anticipates annual double-digit earnings growth for the next five years.

The country’s largest railway says it will pay 45.5 cents per common share on March 29, to shareholders of record on March 8.

The Montreal-based railway said Tuesday it is aiming to reach $5.25 to $5.40 per share in adjusted earnings in 2018, up from $4.99 per share in 2017.

President and CEO Luc Jobin said strong consumer confidence and good economic growth in North America will further expand volumes beyond last year’s record high.

“We remain confident in our ability to deliver for our valued customers, while positioning CN for long-term success,” he said during a conference call.

CN Rail said its 2017 profits surged 51 per cent to nearly $5.5 billion as it was helped by lower U.S. taxes.

During the fourth quarter, the railway earned $2.61 billion or $3.48 per share. That compared to $1.1 billion or $1.32 per share a year earlier.

Excluding a $1.76 billion deferred income tax recovery, profits decreased six per cent to $897 million or $1.20 per share.

Revenues increased two per cent in the quarter ending Dec. 31 to $3.28 billion.

The fourth-quarter results missed expectations as cold winter weather across its network slowed train speeds.

Chief operating officer Michael Cory said high volumes and cold weather hurt train fluidity in the fourth quarter.

“This harsher winter, coupled with higher volumes in certain segments of our network, has had a greater impact on overall velocity and productivity than we have seen in the previous three years,” he told analysts.

He said volume was helped by a doubling of frac sand and doubledigit increases in crude oil, intermodal, automotive and fertilizers.

The railway has been hiring staff and expects to have 400 more conductors available in the first quarter.

It plans to spend a record $3.2 billion in 2018, including $700 million for the acquisition of 60 new locomotives, track infrastructure expansion and intermodal terminal improvements.

Track infrastructure maintenance will get $1.6 billion and about $400 million for the installation of positive train control in the United States.