CN Rail hits record second quarter revenues, waves off recession worries
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.
Despite recession hurdles on the horizon, Canadian National Railway Co. says the tracks are clear for a smooth year after reporting record second-quarter revenues alongside profits that surged past expectations due largely to a spike in crude oil and container sales.
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 on Jul. 26. 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.
But the latter spike did not fully offset the 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 decline in grain and fertilizer carloads.
“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. The coming crop year looks “normalized,” added chief operating officer Rob Reilly.
Meanwhile, revenue from petroleum and chemicals shot up 21 per cent to $829 million year over year amid soaring oil prices, while container shipment sales leaped 28 per cent to $1.32 billion — CN’s biggest earner by far. Oil and coal were the only commodities to see volume go up, however, even as revenue rose nearly across the board.
“We’ve seen over the years a lot of growth in the western corridor,” said CEO Tracy Robinson, who took the top spot on Feb. 28.
“But we’re also going to lean in to more fully utilizing the other parts of the network, densifying the eastern region and the southern regions. This will strengthen our business, our resilience. It’s going to drive stronger returns.”
CN pointed to Halifax as a port that can “replicate the success of the Prince Rupert model.” The company’s main rival, Canadian Pacific Railway Ltd., does not serve the East Coast transport hub.
Supply chain snarls remain a thorn in CN’s side, as warehouse bottlenecks caused by a lack of storage facilities and truckers slow the flow of import containers bound for Montreal and Toronto.
