Canadian National Railway Co.’s profit increased 12.2 per cent to $623-million in the first quarter despite the negative effects of a very cold and snowy winter as Canada’s largest railway beat analyst expectations on both revenue and profit.
CN reported after markets closed that it earned 75 cents per share for the period ended March 31, 10 cents per share higher than last year.
Excluding gains from asset sales, CN earned $551-million or 66 cents per share, compared with $519-million or 61 cents per share in the comparable prior-year period.
Revenues grew 9 per cent to $2.69-billion, led by a 23-per-cent gain from petroleum and chemicals.
The Montreal-based railway was expected to earn 63 cents per share in adjusted profits in the first quarter, up from 61 cents per share in the prior year, according to analysts polled by Thomson Reuters. Revenues were forecast to grow 7.1 per cent to $2.64-billion.
CN chief executive officer Claude Mongeau said the railway delivered “solid” results despite the harshest winter in decades.
“The winter of a lifetime took its toll on network capacity and affected all of our customers, but I’m pleased that CN’s recovery is now well under way, with key safety, operating and service metrics returning to prewinter levels,” he said in a statement.
The lower Canadian dollar increased profits by $26-million in the quarter.
The operating ratio – operating expenses as a percentage of revenues – deteriorated by 1.2 point to 69.6 per cent in the quarter, but was still better than Calgary-based rival Canadian Pacific Railway, which reported Tuesday a ratio of 72 per cent.
The railway saw its volumes increase by 0.6 per cent in the quarter from the prior year, helped by new coal contracts, intermodal contracts won from Canadian Pacific, a 14-per-cent increase in grain shipments and continued growth in transporting crude.
Revenue ton-miles – measuring the relative weight and distance of rail freight transported by CN – increased by five per cent.
Operating expenses increased by 11 per cent to $1.87-billion, mainly due to the weaker loonie and harsh winter.
CN’s outlook for the year is good, powered by growth in 2014 from intermodal, crude-by-rail and the bumper grain crop.
The railway transports about $250-billion worth of goods annually across its network spanning Canada and mid-America.