CN Rail hits record second quarter revenues amid higher fuel and freight rates

CN Rail train Source: iStock/madsci

Canadian National Railway Co. reported record second-quarter revenues alongside profits that surged past expectations due in large part to a spike in crude oil and container sales figures.

Net income jumped 28 per cent or $289 million to $1.33 billion in the quarter ended June 30 versus the same period last year, the Montreal-based company said Tuesday.

Revenues rose 21 per cent or $746 million to $4.34 billion last quarter compared with a year earlier.

The country's largest rail operator said the windfall stemmed from higher fuel surcharge and freight rates as well as larger coal and U.S. grain volumes.

The spike came despite a 40 per cent drop in shipments of Canadian grain – usually CN's top-selling commodity, but far outpaced last quarter by oil and chemicals – which led to a drop of less than one per cent in overall grain and fertilizer sales.

“U.S. grain and coal continues to remain strong due to the unfortunate war in Ukraine and the sanctions on Russia,'' CN chief marketing officer Doug MacDonald told analysts on a conference call.

Meanwhile revenue from petroleum and chemicals revenue shot up 21 per cent to $829 million year over year amid soaring oil prices, while container shipment sales leapt 28 per cent to $1.32 billion CN's biggest earner by far.

On an adjusted basis, diluted earnings shot up by 30 per cent to $1.93 per share from $1.49 per share in the second quarter of 2021. The figure topped analyst expectations of $1.75 per share, according to financial data firm Refinitiv.

CN affirmed its earnings forecast of between 15 per cent and 20 per cent growth in adjusted diluted earnings per share for 2022, after lowering its outlook from a target of 20 per cent three months ago.

CN continues to target an operating ratio – a measure of the railway's efficiency that divides operating expenses by net sales – of just under 60 per cent, compared to its more ambitious January goal of 57 per cent.

© 2022 The Canadian Press

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