Canadian National Railway (CN) has reported that net income in the 2016 second quarter, which ended on June 30, was C$858 million compared with the 2015 second quarter net income of C$886 million. The decrease was primarily due to lower operating income and other income, and higher interest expense; net of related income taxes. Adjusted diluted EPS decreased 3 percent to C$1.11 compared to the 2015 second quarter’s C$1.15 per adjusted diluted EPS.
"CN continued to face a very challenging volume environment in the second quarter and maintained strong discipline in realigning resources to keep them in line with reduced freight demand,” said CN President & CEO Luc Jobin. “Service remained solid, key operating metrics advanced, and we continued to improve our safety record. An important product of our cost-management and productivity focus was a record second-quarter operating ratio of 54.5 percent.”
Revenues for the second quarter of 2016 were down by 9 percent to C$ 2,842 million, and carloadings declined by 12 percent in the quarter.
Operating expenses dropped by 12 percent to C$1,549 million, and operating income decreased five percent to C$1,293 million. The second quarter operating ratio improved by 1.9 percentage points to 54.5 percent.
"We expect the second quarter to be the volume trough for the year. For the balance of 2016, we continue to expect some markets to remain strong, including lumber and panels, automotive, and refined petroleum products, and we anticipate a bumper grain crop in Canada,” continued Jobin. “At the same time, international intermodal volumes are expected to remain challenging while shipments of commodities related to oil and gas development, such as crude oil, frac sand and drilling pipe, are expected to decrease relative to last year.”
Jobin concluded, “Given these expectations, we reiterate our April 25, 2016, financial outlook of aiming to deliver 2016 EPS in line with last year's adjusted diluted EPS of C$4.44."