CN CEO ‘optimistic’ amid Trump trade threat

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 about 17 per cent of the railway’s total, if Trump succeeds in repatriating manufacturing jobs.

CN reported a four-per-cent increase in fourth-quarter 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 with the second-highest snowfall and second-coldest temperatures of the past five years in December.

CN reported fourth-quarter profit of $1.02 million, 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.