Photo courtesy of Canadian National Railway.
|Luc Jobin, CN president and chief executive officer.|
"I am very proud of the solid response from our team of railroaders in accommodating the strong demand during the quarter,” said Luc Jobin, CN president and chief executive officer, during an earnings call with analysts on April 24. “We delivered record first-quarter volumes, including a 14% increase in Western Canadian grain tonnage moved over our network, despite a return to more demanding winter conditions versus last year.”
CN’s net income for the first quarter-ended March 31, totaled C$884 million, equal to C$1.16 per share on the common stock, up 11.6 % from C$792 million, or C$1 compared the same period a year ago.
Revenues for the first quarter of 2017 were C$3.206 billion, an increase of 8%, when compared to the same period in 2016. Revenues increased 39% for coal, 16% for grain and fertilizers, 16% for metals and minerals, 10% for automotive, 7% for intermodal, and 1% for petroleum and chemicals. Revenues declined 3% for forest products.
CN attributed the increase in revenues to higher volumes of Canadian and U.S. grain, frac sand, coal exports, overseas intermodal traffic, and finished vehicles; freight rate increases; and higher applicable fuel surcharge rates. These factors were partly offset by the negative translation impact of a stronger Canadian dollar on U.S.-dollar-denominated revenues.
“Our new Canadian grain plant produced an increase of 14% in grain tonnage from the prior winter,” said Jean-Jacques Ruest, CN’s chief marketing officer and executive vice-president. “CN outperformed the market, and we moved 55% of the first-quarter Canadian grain. Comparatively, last year, we moved 51% of the grain in the first quarter.”
Carloadings for the quarter increased by 9% to 1.368 million, and rail freight revenue per carload decreased by 1%.
Revenue ton-miles (RTMs), measuring the relative weight and distance of rail freight transported by CN, increased by 14% from the year-earlier quarter. Rail freight revenue per RTM decreased by 6% over the year-earlier period, mainly driven by an increase in the average length of haul and the negative translation impact of a stronger Canadian dollar, partly offset by freight rate increases and higher applicable fuel surcharge rates.
Operating expenses for the first quarter increased by 9% to C$1.903 billion. CN attributes the increase to higher fuel prices and higher costs due to increased volumes of traffic, partly offset by the positive translation impact of a stronger Canadian dollar on U.S.-dollar-denominated expenses.
CN said it will continue to further expand into its new terminal in Duluth, Minnesota, U.S., which is expected to enable grain exports via Prince Rupert transloads. Plus new port capacity at Vancouver and Prince Rupert is expected to be online in the second quarter before peak shipping season.
"Our ongoing investments in people, equipment and infrastructure continue to position us well to leverage CN's industry-leading operational performance and superior customer service," Jobin said. "With a strong start in Q1 and an increased volume outlook for the rest of the year, I am pleased to announce an upward revision to our 2017 financial outlook."