CN has reported its financial and operating results for the second quarter and first half ended June 30, 2011.
Claude Mongeau, president and chief executive officer, said:
“CN delivered a solid second-quarter performance as a result of continued improvements in freight volumes and strong operational execution.
“CN railroaders responded quickly and effectively to a series of weather challenges including floods, forest fires and mudslides.
“Their tireless efforts and dedication helped to protect the integrity of our network, the reliability of the supply chain we serve and our service to customers.”
Mongeau said that all of CN’s commodity groups posted revenue gains during the quarter. Intermodal – CN’s largest revenue segment – was a bright spot, benefiting principally from higher import volumes over the ports of Vancouver and Prince Rupert and increased domestic retail shipments.
Total intermodal volumes rose 10% and intermodal revenues increased 14%.
“Intermodal was one of the first areas where we applied our new end-to-end supply chain collaboration approach,” Mongeau said.
“This approach is really starting to pay off, and we hope to enjoy gains in other segments of our business where we have brought forward a similar focus on innovation and service excellence.”
The 8% rise in second-quarter revenues mainly resulted from higher freight volumes as a result of continued though modest improvements in North American and global economic conditions; the impact of a higher fuel surcharge, as a result of year-over-year increases in applicable fuel prices and higher volumes; and freight rate increases.
These factors were partly offset by the negative translation impact of the stronger Canadian dollar on U.S.-dollar-denominated revenues.
Revenues increased for metals and minerals (17%), intermodal (14%), grain and fertilizers (13%), forest products (6%), coal (5%), petroleum and chemicals (3%), and automotive (2%).
Revenue tonne-miles, measuring the relative weight and distance of rail freight transported by CN, increased 5% from the year-earlier period.
Rail freight revenue per revenue ton-mile, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, increased 4% over the second quarter of 2010, largely due to the impact of a higher fuel surcharge and freight rate increases, partly offset by the negative translation impact of the stronger Canadian dollar.
Operating expenses increased by 8% to C$1,386 million, mainly owing to higher fuel costs, increased purchased services and materials expense, and higher labor and fringe benefits expense.
These factors were partly offset by the positive translation impact of the stronger Canadian dollar on U.S.-dollar-denominated expenses, and lower casualty and other expense.
Mongeau said: “I am pleased with CN’s second-quarter results.
“While there is some growing uncertainty about the pace of growth of the U.S. and global economies, we believe our performance in the first half of 2011 positions us to finish the year on a positive note.”
