VANCOUVER, British Columbia (Reuters) - Canadian National Railway CNR.TO posted a 4 percent drop in first-quarter net profit on Monday, citing tough winter weather that slowed train operations.
CN also said the first-quarter profit drop and weakening market conditions have caused it to revise its earnings per share growth outlook to the “mid single digit range” for the full year, down from the “mid-to-high single digit” range it had projected.
“While we believe the U.S. economy may currently be in a recession, we expect a gradual recovery during the second half of the year, and that the global economy will grow at a moderate pace throughout the year,” Chief Executive Hunter Harrison said in a statement.
CN reported a net profit of C$311 million, or 64 Canadian cents a share, for the quarter ended March 31. That compared with a profit of C$324 million, or 63 Canadian cents a share, for the same quarter last year.
The railway said its revenue was nearly C$1.93 billion, compared with C$1.9 billion a year earlier, and said it was maintaining its forecast for revenue growth for the full year of 6 to 8 percent.
CN said it was hit with tough winter weather in both Canada and the United States, with temperatures so cold at times in Western Canada that it had to suspend some train operations for safety reasons.
“Thank God it’s spring,” Harrison told analysts in a conference call.
The company said operating expenses were C$1.4 billion, up from C$1.35 billion a year earlier, and its operating ratio, which measures operating expenses as a percentage of revenues, rose 2.3 basis points to 72.9 percent.
Operating income dropped about 7 percent to C$523 million.
Montreal-headquartered CN said it took its biggest hit in hauling forest products, a sector in which revenues were off 20 percent in the quarter and will remain weak until the U.S. housing market recovers.
Reporting Allan Dowd, Editing Peter Galloway