CN Rail Earnings Beat Analysts' Estimates on Lower Costs

  • Stronger U.S. currency also helps boost railroad's results
  • Company expects `mid single digit' EPS growth this year

Canadian National Railway Co., the country’s biggest railroad, reported fourth-quarter profit that beat analysts’ estimates with the help of falling costs and the stronger U.S. dollar.

Adjusted earnings were C$1.18 a share, the Montreal-based railroad said Tuesday, beating the C$1.11 average forecast in a Bloomberg survey of 26 analysts. Revenue fell 1.3 percent to C$3.17 billion ($2.25 billion), compared with the C$3.18 billion average forecast.

Lower spending on fuel and purchased services enabled Canadian National to reduce operating expenses and weather an industry-wide drop in demand for commodities such as coal, crude oil and grain. Operating ratio, a closely watched measure of railroad efficiency that compares expenses to revenue, dropped to 57.2 percent in the fourth quarter -- a 3.5 percentage-point improvement.

The results were boosted 11 cents a share by the drop in the Canadian dollar, which increases the value of the company’s U.S. sales.

Profit will probably increase by “mid single digits” from last year’s C$4.44 a share, Canadian National said Tuesday. The quarterly dividend will climb 20 percent to 37.50 cents a share, the company also said.

Canadian National rose 1.6 percent to C$71.29 at the close of trading in Toronto. That cut the stock’s decline since Jan. 1 to 7.8 percent.

(A previous version of this story corrected the denomination in the first paragraph.)

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