CN Rail fourth-quarter profit stung as winter chill adds to costs
By Solarina Ho
TORONTO (Reuters) - Canadian National Railway Co (CNR.TO: Quote), the country's largest rail operator, reported higher quarterly earnings on Thursday, saying its full-year volumes and revenue hit record highs, but the results were tempered by extreme winter weather in December and came in slightly below estimates.
CN Rail, which cautioned the weather challenges continued into January, raised its quarterly dividend by 16 percent.
"The extreme cold weather brought us higher labor and higher purchased services and material costs in December, which at this point I would probably estimate to be approximately C$15 million," said Chief Financial Officer Luc Jobin.
"Unfortunately, this little twist of Mother Nature is also extending itself well into January and consequently we are having a similar monthly cost pressure to contend with starting in 2014."
The Montreal-based railway reaffirmed its full-year 2014 outlook, first issued last month, when it said it was targeting double-digit growth in earnings per share from the C$3.06 adjusted diluted earnings per share in 2013.
The company said the weaker Canadian dollar will be a positive tailwind compared to last year.
The company's operating ratio, a key measure of efficiency in the industry, rose 1.2 points to 64.8 percent during the quarter. The higher the ratio, the less efficient the operation.
While CN still reported industry-leading efficiency, the company said it faced "significant headwinds" on issues including pensions. Continued...