CN Railway profit hurt by winter weather chill
By Susan Taylor
TORONTO (Reuters) - Canadian National Railway Co (CNR.TO: Quote) took a big winter weather hit, the country's largest rail operator said on Monday, as extreme cold and heavy snow in Western Canada slowed operations and nipped into profits.
CN said it has since turned the corner, returning to more efficient operations, but will bump up its capital spending plan by C$100 million ($97.39 million), to C$2 billion, to make its network more resilient and productive.
The company performed relatively well during brutal winter weather, but more encouraging is their prospect for growth in the burgeoning crude-by-rail market, said Raymond James analyst Steve Hansen.
"They're tracking at a 60,000 carload run rate now on the crude-by-rail side - that's up quite significantly from the 30,000 carloads they did last year. And they're just getting going on unit train volumes now," he said.
Unit trains, those which have the same origin and destination, are more efficient.
CN executives said during a conference call with analysts that its crude-by-rail revenue was up 300 percent during the quarter with about C$75 million of its book business directly in crude.
"The organic growth prospects for crude-by-rail at CN are very significant. We also expect solid demand from the buoyant North American energy sector," said Executive Vice-President and Chief Marketing Officer Jean-Jacques Ruest. Continued...