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Canadian National Railway Co.‘s revenue fell by 19 per cent in the second quarter, as the COVID-19 pandemic drove down industrial activity and consumer demand.

CN said its profit for the three months ending June 30 dropped by 59 per cent to $545-million, or 77 cents a share, from $1.36-billion or $1.88 in the same period a year ago. Revenue slumped to $3.2-billion, from $4-billion.

CN’s operating ratio, a measure of cost versus sales, deteriorated to 75.5 per cent.

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On a conference call with analysts, CN chief executive officer Jean-Jacques Ruest called it the “toughest quarter of his career.”

The results, released after markets closed on Tuesday, included a non-cash charge of $486-million, or 51 cents a share, for CN’s move to sell “non-core” rail operations.

Volumes of cargo in all categories fell by 16 per cent, led by a 72-per-cent drop in automotive shipments and a 25-per-cent decline in petroleum and chemicals. Grain and fertilizer carloads declined the least, by 3 per cent.

CN is the larger of Canada’s two major freight railways, with a 32,000-kilometre network that reaches both two Canadian coastal ports and runs south through the United States to the Gulf of Mexico.

Year-to-date, CN’s said revenue tonne miles are down by 11 per cent, while its rail cars in service have fallen by 9 per cent. CN has outperformed U.S. railways, which have seen a 13-per-cent plunge in carloads.

CN has responded to the economic slump by laying off 20 per cent of its work force, making idle 700 locomotives and 20,000 rail cars, and closing freight yards and repair shops. In the name of efficiency, CN said it will run longer and heavier trains.

“Some of the takeouts will be permanent,” Mr. Ruest said.

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Walter Spracklin, a stock analyst at Royal Bank of Canada, said in a note to clients that CN and rival Canadian Pacific Railway Co. are seeing the returns of buying bigger grain cars, investing in new, more efficient elevators, and the steady demand for food. CN said on Tuesday it is buying another 1,500 grain rail cars, which carry 10-per-cent more grain than old hopper cars and are quicker to load and unload.

“Grain has been mostly unaffected by COVID-19 and we view this resiliency as a key competitive advantage for both Canadian rails, especially CP, reflecting their large grain franchises,” Mr. Spracklin said.

CN’s share price on the Toronto Stock Exchange has more than recovered from a crash in March, and is up by 10 per cent this year.

May’s freight volumes were likely the low point for the year, and demand for shipping is expected to increase in the rest of 2020, said James Cairns, a CN vice-president. Some employees are being recalled to work as freight volumes rise.

The rail operations CN is selling include short-line railways in Ontario, Wisconsin and Michigan. CN executives on the conference call declined to say how much they expect to receive for the railways.

Ghislain Houle, CN’s finance chief, said CN has ample liquidity and a good credit rating that will ensure it can weather the COVID-19 pandemic.

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“We are ready for anything,” Mr. Ruest added, “whether or not the world goes back to normal in six months or we have a prolonged pandemic.”

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