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            october 16, 2019

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CN declares dividend as profit off 3pc to US$649 million and revenue falls 9pc


The Canadian National Railway's second quarter net profit declined 3.1 per cent year on year to C$858 million (US$649 million), drawn on quarterly revenues of C$2.84 billion, which fell nine per cent, according to Shipping Gazette.
"Intermodal volumes are expected to remain challenging while shipments related to oil and gas - crude oil, frac sand and drilling pipe - are expected to decrease," said recently appointed CN president and CEO Luc Jobin.
"CN continued to face a challenging volume environment and maintained strong discipline in realigning resources to keep them in line with reduced freight demand," he said.
Nonetheless, CN declared a quarterly dividend of C$0.375 per common share.
Said Mr Jobin: "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, refined petroleum products, and we anticipate a bumper grain crop in Canada," he said.
Operating income declined five per cent to C$1.29 billion. Carloadings declined 12 per cent and revenue ton-miles declined 11 per cent. Operating expenses declined 12 per cent to C$1.54 billion.
Although CN reports its earnings in Canadian dollars, a large portion of its revenues and expenses is denominated in US dollars. The fluctuation of the Canadian dollar relative to the US dollar affects the conversion of the company's US dollar denominated revenues and expenses.
Revenues increased for forest products (four per cent), but were more than offset by revenue declines for coal (36 per cent), metals and minerals (17 per cent), petroleum and chemicals (16 per cent), grain and fertilisers (12 per cent), intermodal (four per cent) and automotive (one per cent).
The revenue decline was mainly attributable to decreased shipments of energy-related commodities and lower volumes of Canadian grain.
These factors were partly offset by the positive translation impact of the weaker Canadian dollar on US dollar denominated revenues, freight rate increases as well as increased shipments of lumber and panels to the US.
Carloadings for the quarter declined 12 per cent to 1.2 million. Revenue ton-miles (RTMs), measuring the relative weight and distance of rail freight transported by CN, declined by 11 per cent year on year.
Rail freight revenue per RTM, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, increased one per cent year on year drive by the exchange rate.
Operating expenses for the second quarter decreased 12 per cent to C$1.54 billion, mainly due to lower costs resulting from decreased volumes of traffic, lower fuel prices, lower pension expense and cost-management initiatives, partly offset by the negative translation impact of a weaker Canadian dollar on US dollar denominated expenses.

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