CN Railway says sector-leading efficiency on track

Tue Apr 23, 2013 2:09pm EDT
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TORONTO, April 23 (Reuters) - Canadian National Railway , the country's largest rail carrier, said on Tuesday that its industry-leading operating efficiency is sustainable, based on its view of revenue growth and productivity.

Speaking at the company's annual general meeting in Edmonton, Alberta, Chief Financial Officer Luc Jobin said that CN reported a 2012 operating ratio of 62.9 percent.

Operating ratio measures productivity by tallying how much revenue is required to maintain operations. The lower the number, the better.

"Looking ahead, we see a sustainable mid- to low-60s in terms of operating ratio. That's where we're at and that's what we see looking into the future," Jobin said.

CN's 2012 ratio, which Jobin said was close to 7 points better than its U.S. competitors', was bettered only in 2006, when CN had favorable one-time fuel hedging gains and claims adjustments, he said.

CN's smaller Canadian rival, Canadian Pacific Railway Ltd , is targeting a mid-60 percent operating ratio by 2016. The company, which announces first-quarter results on Wednesday, reported a 74.8 percent ratio in the fourth quarter and has forecast a low-70 percent range ratio for 2013.