Canadian National Railway Co.’s record third-quarter efficiency may be just the start.
Canada’s biggest railroad reported a operating ratio of 53.8 percent for the quarter, and the gauge -- which compares expenses to sales -- may remain below 60 percent through 2016, Chief Financial Officer Luc Jobin said Tuesday. Buoyed by lower fuel costs and higher revenue from shipments of automotive and forest products, Canadian National reported adjusted earnings of C$1.26 a share -- exceeding the C$1.15 average of 25 analyst estimates compiled by Bloomberg.
“Assuming the fuel would stay at the current level certainly we see the scope for a sub-60 percent” ratio in 2016, Jobin said on a conference call. “Those are the conditions and the profile that this organization can deliver.”
Canadian National rose 2.3 percent to C$81.80 at the close of trading in Toronto. The stock has gained 2.5 percent this year.
On an annual basis, Canadian National’s best operating ratio since 1999 was 61.8 percent in 2006, according to data compiled by Bloomberg.
Lower labor and insurance costs also helped Canadian National’s results. Like many North American counterparts, the rail company has had to furlough workers and look for ways to boost efficiency as it seeks to offset declining shipments of coal and grain. of coal and grain. The company now has about 1,100 fewer workers than it did a year ago, Jobin said on the call.
Jobin is coordinating the company’s leadership team after Chief Executive Officer Claude Mongeau took a leave of absence in August to undergo treatment for a tumor. He is due to return early in 2016, the company said Tuesday.
(An earlier version corrected the description of the earnings in the second paragraph.)