In reporting its financial and operating results for the first quarter ended March 31, 2019, CN said it had “very solid results,” including record first-quarter carload volumes, the addition of C$350 million of top-line growth and improved year-over-year car velocity.
Compared to the prior-year period, CN revenues were C$3.54 billion, an 11% increase. Diluted EPS increased 8% to C$1.08; adjusted diluted EPS grew 17% to C$1.17. CN’s operating ratio (OR) rose 1.7% to 69.5%; the adjusted OR rose 0.6% to 67.2%. Operating income grew 5%, to C$1.08 billion.
CN said its revenue increase—C$350 million in top-line growth— was mainly due to “the positive translation impact of a weaker Canadian dollar, freight rate increases, higher volumes of petroleum crude, refined petroleum products, coal and Canadian grain, and higher applicable fuel surcharge rates, partly offset by lower volumes of frac sand.” Carloadings increased 1% to 1.42 million (1%). RTMs (revenue ton-miles) increased 3%. Rail freight revenue per RTM increased 8%.
CN’s operating expenses increased 14% to C$2.46 billion, driven mainly by “an expense related to costs previously capitalized for a Positive Train Control (PTC) back-office system following the deployment of a replacement system, increased labor costs mainly as a result of an increase in headcount, higher costs due to more challenging winter conditions and the negative translation impact of a weaker Canadian dollar.”
“I’m pleased that the CN team continued to deliver very solid results during the first quarter of 2019,” said CN President and CEO JJ Ruest, Railway Age’s 2019 Railroader of the Year. “Despite a prolonged period of historic cold temperatures in key segments of our network, CN railroaders delivered record first-quarter carload volumes, adding $350 million of top-line growth, while improving year-over-year car velocity.”
CN said it aims to deliver an adjusted diluted EPS growth in the low-double-digits range this year vs. last year’s adjusted diluted EPS of C$5.50, and still expects high-single-digit RTM volume growth.
“We remain on track to deliver on our 2019 financial outlook and on our ability to bring long-term value creation to our customers and shareholders,” Ruest said.