Tuesday, January 26, 2010

CN fourth-quarter operating ratio increases

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CN Tuesday reported that net income and diluted earnings per share for the final quarter of 2009 increased 2.0% from the year-earlier period to C$582 million and C$1.23, respectively. Fourth-quarter 2009 revenue declined 14% from a year earlier  to C$1,882 million. The fourth-quarter operating ratio was 65.3%, compared with 62.7% for the same quarter of 2008.

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CN said results included an after-tax gain of C$59 million(C$0.12 per diluted share) from a line sale to Metrolinx, greater Toronto’s regional transit authority, and a deferred income tax recovery of C$99 million (C$0.21 per diluted share). Excluding these items, adjusted fourth-quarter net income was C$424 million,or C$0.90 per diluted share, compared with adjusted net income of C$531 million, or C$1.12 per diluted share, excluding a deferred income tax recovery, for the year-earlier period.

Free cash flow for full-year 2009 was C$790 million, compared with  2008's C$794 million. Net income for full-year 2009 decreased 2.0% from 2008.

Claude Mongeau, CN president and chief executive officer, said: "CN overcame a number of challenges during the fourth quarter, ranging from weather and operational disruptions in Western Canada to a five-day strike by locomotive engineers in Canada. In addition, the stronger Canadian dollar adversely affected our earnings. Despite these challenges, the final quarter of 2009 saw continued sequential improvement in CN's traffic levels and an easing in year-over-year volume comparisons. Carloadings were flat year-over-year, but up 4.0% versus the third quarter of 2009."

Fourth-quarter year-over-year growth was in coal, automotive, grain and fertilizers, and petroleum and chemicals volumes as the economic recovery began taking hold. Intermodal volumes declined 3%, metals and mineral carloadings were down 2%, and forest products markets remain depressed.

Mongeau said: "Throughout the year, the CN team raised the bar on operational execution, tightly controlled costs, and generated solid free cash flow and increased shareholder value through the monetization of underutilized assets. As we go forward, we will build on the improvements in operating metrics we achieved in 2009, including train velocity, lower freight car dwell times in terminals, and improved locomotive fuel efficiency."