Weather helps drive CN Rail’s net profit

Freight demand on the rise as company hauls more grain, automotive, forest products

MONTREAL— Canadian National Railway says milder weather and strong freight demand contributed to a 13per-cent increase in net profit to $704 million in the first quarter on $3.1 billion of revenue.

The country’s largest railway said it earned 86 cents per diluted share in the three months ended March 31, compared with 75 cents per share, or $623 million, a year ago.

Excluding last year’s sale of a rail line, the Montreal-based railway’s adjusted profits increased 28 per cent from $551 million, or 66 cents per diluted share.

Revenues grew 15 per cent from $2.7 billion in the first quarter of 2014.

Revenues increased for grain and fertilizers (24 per cent), forest products (23 per cent), automotive (23 per cent), metals and minerals (22 per cent), petroleum and chemicals (13 per cent), and intermodal (11 per cent). Coal revenues declined by 13 per cent.

The company was expected to earn 85 cents per share in adjusted profit on $3.035 billion of revenues, according to analysts polled by Thomson Reuters.

CN Rail said its revenue ton-miles grew by 7 per cent and carloadings were up 9 per cent.

Its operating ratio, which tracks operating expenses as a percentage of revenue, improved to 65.7 per cent, a decline of 3.9 percentage points.

“CN turned in a solid first-quarter performance thanks to strong freight demand and continued productivity improvements, helped in part by easier winter conditions compared with last year’s polar vortex,” said CEO Claude Mongeau.

He said the railway continues to expect to earn double-digit EPS growth this year above the adjusted $3.76 per share earned last year despite weaker energy markets and a mixed economy.

The railway plans to spend $2.7 billion this year, an increase of $100 million for additional rail infrastructure safety projects. A higher U.S. dollar raised net income by $56 million, or seven cents per share.