October 27, 2015 / 8:45 PM / 2 years ago

CN Railway profit up 18 percent as high rates offset weaker volume

(Reuters) - Canadian National Railway Co (CNR.TO) on Tuesday reported an 18 percent rise in quarterly profit, as higher freight rates helped lift revenue despite lower volumes.

The Canadian National (CN) railyards as seen in Edmonton February 22, 2015. REUTERS/Dan Riedlhuber

The company’s net income rose to C$1.01 billion ($761.5 million), or C$1.26 per share, in the third quarter ended Sept. 30 from C$853 million, or C$1.04 per share, a year earlier.

Revenue rose 3.3 percent to C$3.22 billion.

Analysts surveyed by Reuters had forecast earnings per share of C$1.15.

CN, Canada’s largest railroad, reaffirmed that it continues to expect double-digit growth in earnings for the full year, despite weaker volumes for coal.

CN Rail’s operating ratio, a key efficiency measure, declined five points to 53.8 percent for the third quarter, compared with the same period a year earlier. The ratio expresses operating costs as a percentage of revenue, so lower values are better.

The company, which said it froze hiring and laid off about 600 workers in the second quarter, now has 1,100 fewer employees than during the same period in 2014.

Revenue increased by 13 percent for automotive and 12 percent for forest products, compared with the same period a year earlier, but declined by 13 percent for coal.

The company’s stock ended at C$79.51, down C$2.30 on the Toronto Stock Exchange.

CN also said in a statement that CEO Claude Mongeau is expected to return to work in 2016 after surgery to remove a rare type of soft-tissue tumor.

“Mr. Mongeau underwent a procedure to remove his larynx and a voice prosthesis was placed in his throat,” the company said.“He is currently receiving radiation treatment and is expected to return to work early in the new year following his complete recovery.”

CN also announced a share-buyback program and a fourth-quarter 2015 dividend on its common shares. A quarterly dividend of 31-1/4 cents (C$0.3125) per common share will be paid on Dec. 31, 2015, to shareholders at the close of business on Dec. 10, 2015.

Reporting by Anet Josline Pinto in Bengaluru and Allison Lampert in Montreal; Editing by Kirti Pandey and Dan Grebler

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