Trump won’t throw railways o track: CN
Auto sector has more at stake, CEO says
The chief executive of Canadian National Railway Co. said the Canadian automotive sector could be in the “crosshairs” of any protectionist measures taken by U. S. President Donald Trump, but the railway isn’t overly worried about its own business.
CN recently won a major shipping contract with General Motors Co. away from its chief competitor, Canadian Pacific Railway Ltd., but automotive remains “a very small percentage” of its U. S. export business, CEO Luc Jobin said Tuesday.
Trump has already signalled his intent to renegotiate NAFTA and warned that if American workers don’t get a “fair deal” then he’ ll give notice of his intent to withdraw the United States from the free- trade agreement entirely. But Jobin said he’s “cautiously optimistic” that Canada will maintain its free- trade relationship with the U. S. regardless of what happens to NAFTA.
“Generally, what we’ve been hearing from our U. S. folks is encouraging,” Jobin said on a conference call with analysts.
“We don’t expect any significant change, at least not in the foreseeable future, and I think most of our customers are taking the same sort of optimistic yet cautious approach.”
If the trade relationship were to change, “certainly the automotive sector, both parts and new cars, would be potentially in the crosshairs of that, but that’s a very small percentage of what we actually export to the U. S. southbound,” he added.
Jobin said there might even be opportunities for CN to increase its domestic U. S. business, which is currently about 17 per cent of the railway’s total, if Trump succeeds in repatriating manufacturing jobs.
CN reported a four- percent i ncrease in f ourthquarter volume levels, led by grain, fertilizers, automotive and intermodal traffic.
“That’s an encouraging sign that the worst of the market correction in several commodity sectors is behind us and brighter prospects lay ahead,” Jobin said.
This was despite bad weather. December saw the second-highest snowfall and second-coldest temperatures of the past five years, said chief operating officer Mike Cory.
“In my 35 years in this industry … we have not performed this well in the type of winter conditions we were faced with in December in all of my recollection,” Cory said.
CN reported fourth- quarter profit of $ 1.02 billion, eight- per- cent higher than a year ago. Adjusted earnings per share of $ 1.23 beat analyst estimates of $ 1.21, while revenue of $ 3.22 billion came in slightly below estimates.
The railway’s operating ratio — a key measure of efficiency, in which a lower number is better — fell 0.6 points to a quarterly record of 56.6 per cent.
The company also boosted its annual dividend by 10 per cent to $1.65.
For 2017, CN said it expects to deliver mid- singledigit growth in earnings per share. Citi analyst Christian Wetherbee said CN tends to be conservative in its EPS guidance, but the company’s shares may still be under pressure in response to the weaker- than- expected guidance.