Canadian National Railway Posts Higher Profits, Ending Tough 2016 on a High Note
Canadian National Railway posted a strong fourth quarter as earnings rose 8.2% year-over-year and beat analyst estimates during the period.
The railroad company reported $1.02 billion in profits for the three-month period to close 2016, or $1.32 per share, measured in Canadian dollars. The results were up from $941 million, or $1.18, one year ago. Canadian National generated $3.64 billion in profits for the full year, up from $3.54 billion in 2015.
“Despite facing difficult winter conditions in December, CN delivered very strong fourth-quarter results and throughout 2016 demonstrated once again its ability to perform well in a mixed economic environment,” said CEO Luc Jobin in a statement.
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Revenue improved 1.6% to $3.22 billion in the fourth quarter but fell 4.6% to $12 billion for the full year.
“We saw weaker volumes during the year, but quickly adjusted as our dedicated team of railroaders maintained its focus on operational efficiency, while continuing to provide quality service to our customers and improve our safety performance,” Jobin said.
The results matched an industry trend for most Class I railroads that posted stronger fourth quarter results compared with the rest of 2016, underlying a belief among analysts and executives that a turnaround is under way.
Intermodal revenues were $720 million in the quarter, up 1% from the same period in 2015. For the full year, it dropped 2% to $2.85 billion. The number of intermodal carloads dropped to 541,000 from 545,000 in the fourth quarter of 2015, or 1%. For the full year, volume dropped 3% in the sector to 2,163,000 carloads.
Similar to its competitors, Canadian National reported the biggest drops in coal, metal and minerals, petroleum, crude, frac sand and chemical shipments. Each fell by double-digit percentages on revenue and carloads for the full year. Coal fared the worst with a 30% drop in revenue to $434 million and 24% in total carloads to 333,000.
The operating ratio was 55.9% for the full 2016, an improvement of 230 basis points over the 2015 total. For the quarter, the ratio improved 60 basis points to 56.6%.
The railroad company beat analyst estimates, as compiled from a Bloomberg News survey, by a penny per share.
