CN 2016 Net Income Increases

Canadian National Railway (CN) has reported increases in net income in the 2016 fourth quarter and the 2016 full year. Fourth quarter net income increased 8 percent to C$1,018 million, with diluted EPS increasing 12 percent to C$1.32, compared with the 2015 fourth quarter. Net income for the 2016 full year increased three per cent to C$3,640 million compared with the full year 2015. An increase of 6 percent to C$4.67 per adjusted diluted share was also seen in the 2016 full year.

“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 CN President and CEO Luc Jobin. “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.”

The 2015 fourth quarter operating income increased 3 percent to C$1,395 million, and the operating ratio improved by 0.6 points to 56.6 percent from the 2015 fourth quarter. Carloadings were up by 3 percent in the quarter to 1,369 thousand and operating expenses were up by 1 percent to C$1,822 million.

Revenues for the fourth quarter of 2016 were up by 2 percent to C$3,217 million. Revenues increased 14 percent for grain and fertilizers, 4 percent for automotive and 1 percent for intermodal. Revenues dropped 6 percent for metals and minerals, 6 percent for coal and 5 percent for petroleum and chemicals. Revenues for forest products remained flat.

For the 2016 full year, operating income increased 1 percent to C$5,312 million, and the operating ratio improved by 2.3 points to 55.9 percent from 2015. Carloadings declined by 5 percent to 5,205 thousand and operating expenses dropped by 8 percent to C$6,725 million.

Revenues for 2016 decreased 5 percent to C$12,037 million. Revenues increased 6 percent for automotive, 4 percent for forest products and 1 percent for grain and fertilizers. Revenues decreased 29 percent for coal, 15 percent for metals and minerals, 11 percent for petroleum and chemicals and 2 percent for intermodal.

CN expects to deliver EPS growth in the mid-single-digit range in 2017 over adjusted diluted EPS of C$4.59. The company has a 2017 capital investment program of approximately C$2.5 billion, which includes increased spending for Positive Train Control technology in the United States.

Jobin concluded, “Overall, the economy remains challenging, but we remain optimistic and expect to see moderate volume growth in 2017.”