(Refiles to indicate story is Update 2) (Adds details, background)
VANCOUVER, British Columbia, Jan 22 (Reuters) - Canadian National Railway (CNR.TO) posted a higher operating income in the fourth quarter on Thursday, although its net slipped because of year-ago asset sales.
The company also won a court victory on Thursday in its bid to buy a U.S. rail line, and said that, despite expectations the economy would be weak through 2009, it was confidant enough about cash flows to increase its dividend.
“Are times tough? Yes. But we’re pretty good at dealing with tough times,” Chief Executive Hunter Harrison said, adding that the economic downturn could offer an opportunity to pick up new customers looking to reduce shipping costs.
Harrison’s contract expires at the end of the year, but said the company’s succession plan has been well thought out.
“My prediction is with some 90 degree level of assurance that the candidate will probably come from within,” Harrison told analysts, saying official word would not likely come until the fall.
CN reported a net profit of C$573 million, or C$1.21 per diluted share, in the three months to Dec. 31. That compared with a profit of C$833 million, or C$1.68 per share, in the same period of 2007.
The year-ago net results were boosted by several one-time items, and the company’s operating income of C$820 million was 11 percent higher than a year ago.
The railway’s revenue in the quarter was C$2.2 billion, up 13 percent, but CN said that was largely the result of the impact of the weaker Canadian dollar, which also helped boost expenses by 15 percent.
Montreal-headquartered CN operates in both Canada and the United States.
A U.S. court on Thursday refused to delay CN’s purchase of the Elgin, Joliet & Eastern Railway, a $300 million deal that would allow CN to bypass congestion in Chicago.
The U.S. Surface Transportation Board approved the deal last month after a lengthy environmental review spurred by some suburban Chicago communities who complained they would be harmed by increased freight traffic on the EJ&E line.
“So we’ll be closing that transaction any day now,” Harrison said.
Opponents of the deal had asked a federal appeals court in Washington to stay the purchase, arguing the board’s review had not been adequate.
Canadian National agreed in 2007 to purchase the EJ&E from United States Steel Corp (X.N).
$1=$1.25 Canadian Reporting Allan Dowd, editing by Rob Wilson