CN’s 3rd quarter net income slips 2.4%

CN’s 3rd quarter net income slips 2.4% Canadian National Railway Co. Monday reported third quarter net income of C$485 million ($490 million), a 2.4 percent drop from C$497 million in the same period last year.
   CN said its third quarter revenue of C$2.02 billion ($2.04 billion) was relatively flat, largely due to the strengthening Canadian dollar versus U.S. dollar, lower fuel surcharge revenues, and weaknesses in specific markets, particularly forest products.
   These decreases were partly offset by freight rate increases, an overall improvement in traffic mix, driven primarily by extended routings, and volume growth in Canadian coal, grain and fertilizers, petroleum and chemicals, and automotive traffic, the railroad said.
   “CN’s third quarter results are a solid achievement given the challenges we faced during the period,” said E. Hunter Harrison, CN’s president and chief executive officer. “The stronger Canadian dollar not only affected forest products but also our other businesses. Clearly, few of us expected that the Canadian dollar would surge beyond parity with the U.S. dollar during the quarter. Despite these challenges, we are fortunate to have a diversified portfolio of businesses.”
   After nine months, CN reported net income of C$1.33 billion ($1.34 billion), a decline of 16.6 percent compared to the same period 2006. Revenue was stagnant at C$5.96 billion ($6.02 billion). These results included the impact of a first quarter strike by 2,800 members of the UTU in Canada for which CN estimates a negative impact on net income of C$35 million ($36 million).
   “In the near term, CN anticipates continued weak market conditions in a number of segments, particularly forest products and construction materials,” Harrison said. “In addition, we will continue to confront the financial impact of the Canadian dollar/U.S. dollar exchange rate and its effect on our customers.
   “However, as a result of anticipated gains from the closing of our Central Station Complex and English Welsh and Scottish Railway transactions during the fourth quarter, CN expects to achieve full-year 2007 diluted earnings per share growth of about 5 percent. Excluding these transaction gains, 2007 adjusted diluted earnings per share are expected to be flat versus 2006.”