MONTREAL, QUEBEC, CANADA — Canadian National Railway (CN) on July 22 reported its financial and operating results for the second-quarter and first half ended June 30, 2010.

Net income and diluted earnings per share (EPS) increased by 38% from the year-earlier quarter to C$534 million and C$1.13, respectively. Revenues rose 18% to C$2.1 billion, while carloadings increased 27% and revenue ton-miles rose 15%.

Operating income increased 39% to C$813 million, and operating ratio improved by 6.1 points to 61.2%. Six-month free cash flow totaled C$958 million, up from C$463 million generated during the comparable period of 2009.

Claude Mongeau, president and chief executive officer, said: "I am very pleased with our strong second-quarter 2010 earnings and free cash flow performance. We worked closely with our customers to help them grow their businesses and thereby increase our volumes, generating 27% more carloads and 18% more revenues in the quarter.

"CN's outstanding results were anchored on careful planning – having the right resources in place at the right time – improved customer service, and our team's strong execution of the CN Precision Railroading model. This performance allowed just a seven percent increase in operating expenses and helped us to improve our operating ratio by more than six points to 61.2%."

Net income for the first-half of 2010 was C$1.04 billion, or C$2.21 per diluted share, up from C$811 million, or C$1.72 per diluted share, for the comparable period of 2009.

CN's strong first-half results and an expectation of a continued economic recovery this year have led the company to revise its 2010 guidance upwards. CN now believes it has the scope to achieve an increase of approximately 25% in 2010 adjusted diluted EPS over 2009 adjusted diluted EPS of C$3.24.

In addition, CN expects to achieve free cash flow for 2010 in the range of C$1.1 billion.

"CN has successfully taken advantage of the stronger than expected economic recovery in the first half of 2010," Mongeau said. "We will continue to seize opportunities going forward by supporting our customers in improving the efficiency of their supply chains to help sustain their competitiveness in end markets."