CN Adjusts Post-Strike Guidance

Written by William C. Vantuono, Editor-in-Chief
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CN President and CEO JJ Ruest. CN photo.

In the wake of an eight-day strike that seriously impacted operations, CN is revising its full-year 2019 financial outlook. The railroad said its strike recovery plan is “on track.”

CN estimated the strike’s financial impact at around $0.15 of EPS, and is now targeting to deliver 2019 adjusted diluted EPS growth in the low- to mid-single-digit range vs. 2018’s adjusted diluted EPS of C$5.50—compared to its Oct. 22, 2019 financial outlook, which called for adjusted diluted EPS growth in the high single-digit range.

“CN remains focused on continuing to realign its resources in light of the weaker demand, including its workforce, to address cost takeout efforts that started prior to the strike. Our discipline on our recovery plan is delivering results,” said President and CEO JJ Ruest. “While we expect to take some time and we remain dependent on favorable weather, we are pleased by how things are progressing. Safety is at the heart of everything we are doing as we bring our Canadian Operations back on line, and we have not experienced any significant setbacks at this point. CN would like to thank its customers for the collaboration they have provided during the recovery process and will continue to work closely with them.”

Roughly 3,200 CN conductors and yard crew workers represented by the Teamsters Canada Rail Conference began a well-publicized strike on Nov. 19 that ended Nov. 26. “While it will likely take weeks for railroad operations to be fully back to normal, we believe that there will little lasting impact to 2020 results,” Cowen and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl noted. “However, 4Q19 carloads will be weaker than expected, and we forecast cost items to be slightly higher, while also adjusting for fuel. To that end, we have maintained our 2020 EPS estimate of C$6.70 (US$5.15), while lowering our 4Q19 EPS estimate to C$1.21 (US$0.91). Our new 2019 EPS estimate is 4.7% higher than 2018’s C$5.50 EPS result, in line with the company’s new low- to mid-single-digit EPS growth guidance.”

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