Canadian National Railway Co.’s earnings are riding high as the company books healthy gains in freight volumes, led by a 17-per-cent jump in shipments of petroleum and chemicals.
The railway’s third-quarter profit of $705-million topped expectations, and it announced a stock split. But its chief executive officer tried to play down a weekend derailment in Alberta that led to two explosions and asserted that customers can rely on CN to transport energy products safely.
Claude Mongeau said CN intends to increase its presence in the energy market by increasing shipments of crude oil by rail.
“We have to keep getting better, and if we do, I believe we are a viable alternative to move all the energy products, including crude,” he said during a conference call Tuesday with industry analysts. “We move more heavy crude than we move light crude, and we believe this is there to stay with us, as long as we continue to operate a safe railroad, which we are committed to do.”
Mr. Mongeau said CN’s third-quarter performance showed improvement in a key safety indicator – its accident rate per million train miles was 1.31 in the three months ended Sept. 30, compared with 2.30 in the same period last year.
“During the quarter, we had a very solid safety record. Obviously, we do have accidents from time to time. We had a very serious one this weekend, with fire involving propane cars in Alberta.”
Montreal Maine & Atlantic Railway’s deadly runaway train derailment in Lac-Mégantic, Que., in July, which killed 47 people, as well as the recent Alberta accident have fuelled public debate about the safety of moving energy products by rail.
“Delivering safety and responsibility is a foundation for CN, and we are continuing to focus our record in this regard,” Mr. Mongeau said.
“We have an unwavering commitment to operating a safe railroad. It’s true of all the dangerous commodities that we move. To be able to have so few accidents in any given year with so much volume is quite remarkable.”
The Transportation Safety Board of Canada reported there were 131 main-track accidents across Canada’s railway industry in 2012.
Mr. Mongeau said it is important to keep CN’s operations in perspective. “We have a handful of accidents every month – two to three would be our average,” he said. “It’s difficult to get better than that, but we are committed to continue to improve, to make sure that we have as few incidents as we can. And when we do have incidents, we are reacting to them with a comprehensive response, owning up to it, like we did this weekend.”
Mr. Mongeau made the comments after CN announced a two-for-one stock split while posting a 6-per-cent increase in its third-quarter profit.
Montreal-based CN had a third-quarter profit of $705-million, compared with $664-million in the same period last year. Share profit climbed to $1.67 from $1.52, while revenue increased to $2.69-billion from $2.49-billion.
Canada’s largest railway said it improved its third-quarter operating ratio, a key indicator of productivity that measures costs as a percentage of revenue. `
A lower number is better, and CN registered an operating ratio of 59.8 per cent in the three months ended Sept. 30, down from 60.6 per cent in the third quarter in 2012.
CN garnered $485-million in third-quarter revenue from petroleum and chemicals, up 17 per cent from a year earlier. The railway also enjoyed revenue gains in other categories such as metals and minerals, forest products, automotive and intermodal.
Calgary-based Canadian Pacific Railway Ltd. will report its third-quarter results on Wednesday.