CN delivers flat Q1 results amid network disruptions and COVID-19

CN’s investments have focused on safety and capacity to strengthen rail network, help reduce emissions, and support economic growth.

CN has reported its financial and operating results for Q1 ended March 31, 2020. Revenues for Q1 2020 of *C$3,545m remained flat when compared to the same period in 2019, reporting C$3,544m.

Operating expenses for the first quarter decreased by 5% to C$2,330m, mainly driven by lower labour costs, depreciation expense and fuel expense. Operating income of C$1,215m, shows an increase of 13% (or 4% on an adjusted basis).

The inclusion of TransX within the domestic market of the intermodal commodity group, freight rate increases, higher volumes of petroleum crude and increased shipments of Canadian grain, were offset by lower volumes across all other commodity groups mostly due to the impacts of the illegal blockades in February 2020 and the COVID-19 pandemic in late March. RTMs, measuring the relative weight and distance of freight transported by CN, declined by 1% from the year-earlier period. Freight revenue per RTM increased by 2% over the year-earlier period, mainly due to the inclusion of TransX in the intermodal commodity group and freight rate increases.

Due to the unprecedented and extraordinary impact on the economy COVID-19 pandemic is having, the economic outlook, and therefore overall demand for transportation services, are highly correlated with the duration of containment measures and the impacts on businesses and consumers, which at this point remain uncertain. As a result, CN is withdrew its 2020 financial guidance and 3-year targets provided at the 2019 Investor Day.

Revenues for the individual sub-divisions are as following;

  • Petroleum and chemicals revenue saw an 8% increase Y-o-Y to C$791m.
  • Coal revenues decreased by 12% from C$163m in Q1 2019 to C$143 in Q1 2020.
  • Grain and fertilizers revenues went up by 6%, to C$610m.
  • Intermodal remained flat at C$849m.
  • Automotive revenues shrunk by 9% to C$193m
  • Metals minerals went down by 4% in revenues to C$405m.
  • Revenues for forest products decreased by 5%, from C$456m in Q1 2019 to C$433m in Q1 2020.

JJ Ruest, President and CEO of CN said, “I am very proud of how we recovered quickly in March from the service disruptions in February. Our network is very fluid, and we are continuing the temporary right-sizing of our resources to match the weaker demand caused by the global recession. We are committed to providing long-term shareholder value by delivering on our strategic capacity investments for growth and by deploying technological innovations.”

Source: CN

* C$1 = $0.71 / C$1 = €0.65

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