BLOOMBERG, OCTOBER 21, 2020
Petroleum, coal, metals and automotive volumes all plunged by double-digit percentages | Grain and fertilizer shipments up
By Marcy Nicholson for Bloomberg – Canadian National Railway Co. reported third-quarter revenue of C$3.41 billion ($2.6 billion), missing analysts’ expectations for C$3.5 billion. The Montreal-based railway said it experienced lower volumes across most commodity groups amid the Covid-19 pandemic.
- Revenue was down 11% from a year earlier. That was an improvement from the 19% drop in the second quarter, when many parts of the North American economy were shut down to contain the spread of the coronavirus.
- Grain and fertilizers were a bright spot, with revenue in that segment rising 10% in the quarter. It’s up 5% in the first nine months through September. Canadian and U.S. grain is expected to be a key driver in Q4 and in 2021, James Cairns, senior vice-president of rail centric supply chain, said on a conference call.
- Operating expenses dropped by 8% to C$2 billion, mainly due to lower fuel and labor costs. But with the revenue decline, the railway still reported lower overall efficiency. Its operating ratio came in at 59.9%, up 2 percentage points from a year earlier.
- Petroleum, coal, metals and automotive volumes all plunged by double-digit percentages. In July, Canadian crude-by-rail exports dropped to their lowest level since 2012 as the pandemic forced oil companies to cut production, leaving more room available on pipelines. Shipments of refined products were also weak, Cairns said.
- “We will drive hard on key markets, including Canadian grain, Canadian coal and propane,” Cairns said.
- The company said it bought 2,500 new high-capacity grain hoppers, with expectations for a record Canadian grain crop and above-average U.S. grain crop. Additionally, it brought back all the lumber cars that were in storage.
- Diluted per-share earnings were C$1.38, down 17%.
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