(Reuters) - Canadian National Railway Co (CNR.TO) (CNI.N) said on Tuesday it sees crude shipments as a growth driver in the year for the country’s largest railway operator, which reported better-than-expected fourth-quarter profit.
Canadian railroad operators had been benefiting from shipping oil for producers looking for alternatives to congested pipeline until recently when Alberta’s output cuts in Jan, 2019 hurt crude-by-rail volumes.
The volumes, however, started recovering late last year, after Alberta eased the curtailments in October and said it would allow companies to produce additional oil if they move it by rail.
“We expect significant year-over-year growth in crude carloads for the balance of first quarter,” said James Cairns, senior vice president of Rail Centric Supply Chain at CN Rail on a post-earnings call with analysts.
The company’s quarterly results were hurt by a crippling eight-day strike in November, but it has been ramping up its services to clear delayed shipments.
The strike resulted in lower volumes shipped across all units in the quarter, with revenue from the petroleum and chemicals segment, which includes crude-by-rail shipments, falling 8% to C$169 million ($128.60 million).
CN Rail’s operating ratio, a closely watched productivity metric that measures expenses as a percentage of revenue, worsened to 66% from 61.9% a year earlier. A higher ratio represents inefficiency.
Net income fell to C$873 million, or C$1.22 per share, in the quarter ended Dec. 31, from C$1.14 billion, or C$1.56 per share, a year earlier.
Excluding one-time items, the company earned C$1.25 per share, beating the average analyst estimate of C$1.20, according to IBES data from Refinitiv.
Revenue fell to C$3.58 billion from C$3.80 billion, but was above analysts’ expectations of $3.52 billion.
Shares of the company, which said it would buy back up to 16 million common shares over the next one year, closed at C$123.47 on Tuesday.
Reporting by C Nivedita in Bengaluru; Editing by Shinjini Ganguli