CN slightly beats forecasts by earning $555 million in first quarter

MONTREAL -- Canadian National Railway reported slightly better than expected results for the first quarter despite harsh winter weather.

The country's largest railway said Monday it earned $555 million or $1.30 per share for the quarter ended March 31.

The results compared with a profit of $775 million or $1.75 per share a year ago, when the company gained $252 million from the sale of rail lines in the Toronto area to Metrolinx.

Excluding one-time gains, the Montreal-based railway (TSX:CNR) said it earned $519 million of $1.22 per share for the quarter compared with $523 million of $1.18 per share a year ago when the company had more shares outstanding.

The average analyst estimate had been for a profit of $1.21 per share in adjusted profits, according to Thomson Reuters.

Revenues increased five per cent to $2.47 billion, from $2.35 billion a year ago, while revenue ton-miles rose three per cent and carloadings increased two per cent.

"CN faced a number of operational challenges in the first quarter, including extreme cold and heavy snow in Western Canada, which hampered operations, congested the network and constrained volume growth," CEO Claude Mongeau said in a statement.

He said that train velocity and freight car dwell times in yards have since improved.

The results, which were to be announced after the close of markets Monday, were released "inadvertently" two hours ahead of schedule on the company's website.

CN also said Monday it plans to spend $2 billion on capital spending this year, $100 million more than previously announced.

The money will be used to "improve network resilience" to accommodate its expectation of continued strong volume growth.

Among the projects are capacity upgrades in the Edmonton-Winnipeg corridor.

The railway's operating ratio was 68.4 per cent, a deterioration of 2.2 percentage points from a year ago.

CN said the revenue increase was mainly attributable to rate increases and higher freight volumes.

Revenues increased from petroleum and chemicals (up 17 per cent), intermodal (seven per cent), metals and minerals (three per cent), forest products (two per cent), automotive (two per cent) and grain and fertilizers (one per cent). Coal revenues declined one per cent.

Operating expenses increased nine per cent, due to several factors, including higher labour costs and operational challenges including winter conditions.