Monday, April 23, 2012

CN revises outlook upward after strong quarter

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CN late Monday, April 23, posted strong first quarter results, prompting the railroad to revise its outlook for the year upward.

Net income for the first quarter of 2012 was C$775 million, or C$1.75 per diluted share, vs. first-quarter 2011 net income of C$668 million, or C$1.45 per diluted share. Excluding the gain on the sale of rail line segments, adjusted diluted earnings per share (EPS) for first-quarter 2012 were C$1.18, an increase of 31% over adjusted diluted EPS of C$0.90 for the same period of 2011.

CN’s first-quarter 2012 results included an after-tax gain of C$252 million, or C$0.57 per diluted share, and the first quarter of 2011 included an after-tax gain of C$254 million, or C$0.55 per diluted share, from the sale of rail line segments in the Toronto area to a public transit agency.

First-quarter 2012 revenues increased 13% to C$2,346 million, while revenue ton-miles rose 6% and carloadings increased 5%. Operating income increased 23% to C$793 million. The operating ratio was 66.2% vs. the year-earlier first-quarter OR of 69.0%.

Claude Mongeau, president and chief executive officer, said CN's strong first-quarter results and assumption of continued improvement in economic conditions have prompted a positive revision to the company's 2012 financial outlook, first issued on Jan. 24, 2012. Under its revised 2012 outlook, CN is aiming to deliver a full 10% growth in diluted EPS, on an adjusted basis, over diluted EPS of C$4.84 in 2011 despite significant headwinds from additional pension expense of approximately C$100 million vs. 2011. This compares with CN's prior 2012 diluted EPS growth forecast of up to 10%, including headwinds from additional pension expense of approximately C$120 million. CN also expects to generate free cash flow of approximately C$950 million, compared with the previous guidance in the order of C$875 million.