* Sees double digit growth in diluted EPS in 2010
* Says strong C$ biggest obstacle to earnings growth
TORONTO, March 24 (Reuters) - Canadian National Railway Co (CNR.TO) is on track to meet the profit forecast it issued at the beginning of the year, but the stronger Canadian dollar is not helping, the company’s chief financial officer said on Wednesday.
Canada’s biggest railway said in January that the worst of the effects of the economic downturn were behind it and that it was targeting double-digit growth in diluted earnings per share (EPS) in 2010.
“So far, the good news is the numbers are supporting that view,” CFO Luc Jobin told a transportation and logistics conference organized by National Bank Financial.
He said CN, which operates in Canada and the United States, expects the gradual economic recovery to stay on track, though there may be a few bumps along the way.
“So far, what that means is that the first quarter is off to a good start, but it’s still early in the year.”
The strength of the Canadian dollar was acting as a drag on profits, Jobin said.
So far this year, the currency has been running at about 98 U.S. cents, whereas last year, it was worth an average of 88 U.S. cents. The stronger Canadian dollar depresses CN’s U.S. dollar-denominated revenue when it is converted to Canadian currency.
“So, clearly, if you use the metric which we have which is that every cent of exchange roughly translates into 2 cents EPS, that’s a significant headwind for us as we look to the year,” he said, adding that the company still expects double digit growth in adjusted EPS for 2010.
Jobin said CN expects about C$700 million ($686 million) in free cash flow this year. ($1=$1.02 Canadian) (Reporting by John McCrank; editing by Peter Galloway)