Jul 24, 2018
CN Rail raises outlook as new CEO speeds service
, Bloomberg News
Less than five months into the job, Canadian National Railway Co.’s (CNR.TO) new boss is making good on a pledge to speed up service and improve the carrier’s performance.
Trains moved more swiftly in the second quarter than in the first, and spent less time idling in rail yards, Canadian National said in a statement Tuesday as it reported earnings. The company raised its 2018 profit forecast, citing a “swift network recovery” after stumbles that began in the second half of last year.
The results are a testament to the railroad’s progress under Chief Executive Officer Jean-Jacques Ruest, who was named to the post Tuesday after being promoted in March on an interim basis. Ruest replaced Luc Jobin, who was ousted after the railroad failed to accommodate a surge in freight traffic that started in the second half of 2017. Ruest will serve on the board of the Montreal-based company.
Canadian National also boosted its 2018 capital investing program for the second time this year to a record $3.5 billion to fix bottlenecks by adding staff, new tracks, sidings and locomotives. The $100 million in additional investment will go mainly toward the purchase of new rail cars, the company said.
Earnings Forecast
Canadian National now aims to deliver 2018 adjusted per-share profit of $5.30 to $5.45, compared with last year’s $4.99. The company had lowered the range in April.
Shares fell 0.5 per cent to $112 at the close of trading in Toronto Tuesday. Through Tuesday, the stock had gained 8.1 per cent this year, topping the 1.1 per cent return of the S&P/TSX Composite Index.
Adjusted profit climbed to $1.51 a share in the second quarter, compared with the $1.38 average of analysts’ estimates compiled by Bloomberg. Sales increased to $3.63 billion, topping the $3.57 billion expected by analysts.
Operating ratio, a key industry gauge of efficiency in which a smaller number is better, deteriorated 0.7 percentage point to 58.2 per cent in the quarter compared to a year earlier. Smaller rival Canadian Pacific Railway Ltd. reported a ratio of 64.2 per cent for the period last week.
