Canadian National Rail tops profit estimates as crude shipments rise

January 29, 2019

(Reuters) – Canadian National Railway Co topped analysts’ estimates for quarterly profit on Tuesday, as the railroad company transported higher volumes of petroleum crude and Canadian grain.

Carloads, the amount of freight loaded into cars, rose about 5 percent in the final quarter of 2018, while rail freight revenue per carload increased about 11 percent, Canada’s largest railroad operator said in a statement.

CN Rail and its smaller rival Canadian Pacific Railway have been investing in infrastructure to ease capacity constraints following a surge in demand for rail transport from oil producers as production exceeds pipeline capacity.

Major Canadian oil producer Cenovus Energy began shipments on CN Rail’s network starting in the final quarter of 2018 as part of a three-year deal that Cenovus also signed with CP.

CN on Tuesday also approved an 18 percent increase to its quarterly cash dividend and announced a stock buyback of up to 22 million shares.

The Montreal-based company said its quarterly operating ratio, which measures operating costs as a percentage of revenue, reached 61.9 percent compared with 62.7 percent a year earlier. The lower the ratio, the more efficient the railroad.

CN’s net income fell about 56 percent to C$1.14 billion ($858.8 million) as the company recorded an income tax gain of C$1.76 billion in the same period last year.

Excluding one-time items, CN earned C$1.49 per share, beating analysts’ average estimate of C$1.47, according to IBES data from Refinitiv.

Revenue rose nearly 16 percent to C$3.81 billion from C$3.29 billion.

Meanwhile, CP Rail beat profit estimates last week helped by higher shipments of crude and other commodities.

(Reporting by Shanti S Nair in Bengaluru; Editing by Sai Sachin Ravikumar)