Canadian National Monday reported income of C$511 million, or C$1.08 per diluted share, for the first quarter of 2010, up 21% from the comparable period in 2009. Revenue was up 6% to C$1.97 billion. Operating income increased 25% to C$603 million. The railroad’s operating ratio was 69.3%, improving significantly from the 71.7% for the first quarter of 2009.
In a statement, CN President and CEO Claude Mongeau said: "I am very pleased with CN's first-quarter results in terms of both earnings growth and free cash flow generation. We delivered a solid winter operating performance, allowing us to accommodate increased freight volumes at low incremental cost and significantly improve service to help our customers take advantage of the stronger-than-expected economic recovery."
CN said it anticipates a “stronger economic recovery going forward” and has revised its 2010 earnings estimate upward, even though CN faces the prospect ofa higher-than-anticipated Canadian dollar, relative to its U.S. counterpart; the two currencies are now virtually on par. CN said a large portion of its revenue and expenses is denominated in U.S. dollars, which is affected by exchange-rate fluctuations.I
Mongeau said: "Our team is building momentum. We are focused onoperational excellence to drive network velocity and to innovate on the service front—our goal is to offer our customers a better transportation product to help them compete in their end markets. If the economy continues on its recovery trend, increased traffic levels and solid execution should help CN produce strong financial results for its shareholders in 2010 and beyond."
CN said its revenue gains resulted “from higher freight volumes in all commodity groups as a result of improving economic conditions in North America and globally; a higher fuel surcharge owing to year-over-year increases in applicable fuel prices and higher volumes; and freight rate increases. These factors were partly offset by the negative translation impact of the stronger Canadian dollar on U.S.-dollar-denominated revenues.”