April 24, 2017 / 8:31 PM / 4 months ago

UPDATE 2-CN Rail's revenue rises 8 pct on higher freight volumes

(Adds CEO comment from conference call)

By Allison Lampert

MONTREAL April 24 (Reuters) - Canadian National Railway Co on Monday reported an 8 percent increase in quarterly revenue as the railroad moved record volumes, boosted by grain, frac sand and coal.

Canada's largest railroad also approved a quarterly dividend and said total carloads rose 9 percent in the first quarter ended March 31, although rail freight revenue per carload decreased by 1 percent.

CN said it expects to earn more on a per-share basis this year and sees an approximate 10 percent growth in 2017 revenue ton-mile (RTM), which measures the relative weight and distance of freight transported by a railroad.

The Montreal-based railroad now expects 2017 adjusted earnings of C$4.95-C$5.10 per share, up from last year's earnings of C$4.59 per share.

CN, like its rivals, is seeing improved economic conditions in 2017, following a weakness in commodities last year. Positive growth drivers during the first quarter included frac sand, U.S. terminal coal, grain and potash, CN's chief marketing officer, Jean-Jacques Ruest, told analysts.

Chief Financial Officer Ghislain Houle said he expects a strong second quarter, "while the rest of the year, in particularly the fourth quarter, will face more difficult (comparables)."

Higher fuel prices helped drive up CN's operating expenses 11 percent, on a constant currency basis, and the railroad's operating ratio rose to 59.4 percent, up 0.5 of a percentage point compared with a year earlier.

The lower the operating ratio, a key industry metric which measures operating costs as a percentage of revenue, the more efficient the railroad.

CN Chief Executive Officer Luc Jobin said the company will not try to win new customers at the expense of its lean cost structure.

"We want to be positioned for continued growth. At the same time, we don't want to go too far out into investments," he said.

CN also increased its 2017 capital investment forecast by C$100 million to C$2.6 billion ($1.93 billion), the company said.

The railroad said net income rose to C$884 million or C$1.16 per share in the first quarter, from C$792 million or C$1 per share, a year earlier.

CN's board approved a second-quarter 2017 dividend of 41-1/4 cents (C$0.4125) per common share that will be paid on June 30, 2017, to shareholders of record at the close of business on June 9.

Excluding onetime items, CN earned C$1.15 per share, in line with analysts' average estimate, according to Thomson Reuters I/B/E/S.

Revenue rose to C$3.21 billion from C$2.96 billion. ($1 = 1.3504 Canadian dollars) (Reporting by Allison Lampert in Montreal. Additional reporting by John Benny in Bengaluru; Editing by Sai Sachin Ravikumar)

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