CN Railway profit climbs on record volumes; lifts outlook
TORONTO (Reuters) - Canadian National Railway Co, the country's largest rail operator, reported a big spike in profit on Monday as it moved record volumes of goods and made a swift recovery from last quarter's brutal winter weather.
The Montreal-based railway also bolstered its 2014 financial outlook, saying it sees ongoing volume growth in such key markets as energy, grain and intermodal shipping containers.
"We are seeing a robust pipeline of growth, for the most part, across our lines of business," Chief Executive Claude Mongeau said on a conference call with analysts after markets closed. "It's tough to lap strong growth, year over year, but that's our agenda."
Shaking off the fall-out from a harsh winter that disrupted service and clogged North American rail corridors, CN said second-quarter revenue climbed 17 percent as carload volumes grew 11 percent.
The increase in revenue was mainly due to bigger volumes from Canada's record grain crop, robust energy markets, and market share gains in such sectors as intermodal traffic, CN said. Shipment backlogs also lifted volumes.
CN said it now expects to deliver "solid double-digit EPS growth" in 2014 over 2013 earnings per share of C$3.06, versus an earlier forecast of "aiming for double-digit" growth.
It also lifted its 2014 free cash flow forecast to a range of C$1.8 billion to C$2 billion, from a previous view of C$1.6 billion to C$1.7 billion.
CN has earmarked C$2.25 billion in capital spending this year on growth, efficiency and safety.
The results follow a better-than-expected performance from smaller rival Canadian Pacific Railway Ltd last week. CP said rising freight volumes and prices should push already record results to new highs later this year. Continued...