[h=1]CN reports Q3-2015 net income of C$1,007 million, or C$1.26 per diluted share[/h]
Diluted earnings per share (EPS) increased 21 per cent
MONTREAL, Oct. 27, 2015 /CNW/ - CN (TSX: CNR) (NYSE: CNI) today reported its financial and operating results for the third quarter ended Sept. 30, 2015.
Third-quarter 2015 financial highlights
"We remain committed to our long-term agenda of Operational and Service Excellence, investing in the safety and integrity of our network, and fulfilling our role as a true backbone of the economy.
"With CN's continued strong performance this year, we are pleased to reaffirm our outlook for double-digit adjusted EPS growth in 2015 versus last year's adjusted diluted EPS of C$3.76." (1) (2)
Foreign currency impact on results
Although CN reports its earnings in Canadian dollars, a large portion of its revenues and expenses is denominated in U.S. dollars. The fluctuation of the Canadian dollar relative to the U.S. dollar affects the conversion of the Company's U.S.-dollar-denominated revenues and expenses. On a constant currency basis, CN's net income for the third quarter of 2015 would have been lower by C$107 million(C$0.13 per diluted share). (1)
Third-quarter 2015 revenues, traffic volumes and expenses
Revenues for the third quarter of 2015 increased by three per cent to C$3,222 million. Revenues increased for automotive (13 per cent), forest products (12 per cent), intermodal (five per cent), petroleum and chemicals (three per cent), and grain and fertilizers (two per cent). Revenues declined for coal (13 per cent) and metals and minerals (three per cent).
The revenue performance was mainly attributable to the positive translation impact of the weaker Canadian dollar on U.S.-dollar-denominated revenues; freight rate increases; strong overseas intermodal demand, higher volumes of finished vehicle traffic, and increased shipments of lumber and panels to U.S. markets. These factors were partly offset by a lower applicable fuel surcharge rate; decreased shipments of coal due to weaker North American and global demand; reduced shipments of energy-related commodities including crude oil, frac sand and drilling pipe; lower volumes of semi-finished steel products and short-haul iron ore; as well as lower volumes of Canadian grain versus the prior year's record crop.
Carloadings for the quarter declined by six per cent to 1,393 thousand.
Revenue ton-miles, measuring the relative weight and distance of rail freight transported by CN, declined by six per cent over the year-earlier quarter. 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 by 10 per cent over the year-earlier period, driven by the positive translation impact of the weaker Canadian dollar and freight rate increases, partly offset by a lower applicable fuel surcharge rate and an increase in the average length of haul.
Operating expenses for the quarter decreased by five per cent to C$1,735 million, mainly due to lower fuel costs and lower casualty and other expense, partly offset by the negative translation impact of a weaker Canadian dollar on U.S.-dollar-denominated expenses.
Update on recovery of President and CEO Claude Mongeau
Claude Mongeau had successful surgery in Montreal to remove a rare type of soft-tissue tumour. Mr. Mongeau underwent a procedure to remove his larynx and a voice prosthesis was placed in his throat. He is currently receiving radiation treatment and is expected to return to work early in the new year following his complete recovery.
"Claude is upbeat, recovering well, and remains engaged in the business," said Robert Pace, chairman of CN. "We wish him a speedy and full recovery as he focuses on his health.
"The Board has every confidence in the experienced leadership team to continue to deliver strong results, and all of us look forward to Claude's return."
Forward-Looking Statements
Certain information included in this news release constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements. To the extent that CN has provided guidance that are non-GAAP financial measures, the Company may not be able to provide a reconciliation to the GAAP measures, due to unknown variables and uncertainty related to future results. Key assumptions used in determining forward-looking information are set forth below.
2015 key assumptions
CN has made a number of economic and market assumptions in preparing its 2015 outlook. The Company is assuming that North American industrial production for the year will increase by approximately one per cent and is now assuming U.S. housing starts in the range of 1.1 million units and U.S. motor vehicle sales of approximately 17 million units, versus its previous (July 20, 2015) assumptions of 1.2 million and 16.7 million, respectively. The 2014/2015 Canadian grain crop represented a significant reduction toward the historical trend line after a record 2013/2014 grain crop, while the 2014/2015 U.S. grain crop was above trend. For the 2015/2016 crop year, the Company now assumes that the Canadian grain crop will be below the five-year average and that the U.S. grain crop will be above the five-year average, compared with its previous assumption that both crops would be in-line with trend yields. CN also now expects 2015 customer shipments of energy-related commodities, namely crude oil and frac sand, to be below 2014 levels, versus its previous assumption of no growth. With these assumptions, CN now assumes total carloads for all freight categories in 2015 will be approximately 2 per cent below 2014 levels, compared with its previous assumption that 2015 shipments would be comparable with those in 2014. CN expects continued pricing improvement above inflation. CN now assumes that in 2015 the value of the Canadian dollar in U.S. currency will be in the range of $0.75 to $0.80, and that the average price of crude oil (West Texas Intermediate) will be in the range of US$45 to US$50 per barrel, versus its previous assumptions of approximately $0.80 and US$50 per barrel, respectively. In 2015, CN plans to invest approximately C$2.7 billion in its capital program, of which approximately C$1.4 billion is targeted toward maintaining the safety and integrity of the network, particularly track infrastructure.
Important risk factors that could affect the forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CN's annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risk factors.
CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement.
1) See discussion and reconciliation of non-GAAP adjusted performance measures in the attached supplementary schedule, Non-GAAP Measures.
2) See Forward-Looking statements for a summary of the key assumptions and risks regarding CN's 2015 outlook.
This earnings news release, as well as additional financial information, including the Financial Statements, Notes thereto and Management's Discussion and Analysis, is contained in the CN Quarterly Review available on the Company's website atwww.cn.ca/quarterly-releases and on SEDAR at www.sedar.com as well as on EDGAR at www.sec.gov.
CN is a true backbone of the economy whose team of approximately 25,000 railroaders transports more than C$250 billion worth of goods annually for a wide range of business sectors, ranging from resource products to manufactured products to consumer goods, across a rail network of approximately 20,000 route-miles spanning Canada and mid-America. CN - Canadian National Railway Company, along with its operating railway subsidiaries - serves the cities and ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax,New Orleans, and Mobile, Ala., and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth, Minn./Superior, Wis., and Jackson, Miss., with connections to all points in North America. For more information about CN, visit the Company's website at www.cn.ca.
Diluted earnings per share (EPS) increased 21 per cent
MONTREAL, Oct. 27, 2015 /CNW/ - CN (TSX: CNR) (NYSE: CNI) today reported its financial and operating results for the third quarter ended Sept. 30, 2015.
Third-quarter 2015 financial highlights
- Net income increased 18 per cent to C$1,007 million, while diluted EPS increased 21 per cent to C$1.26.
- Q3-2015 operating income increased 16 per cent to C$1,487 million.
- Third-quarter 2015 revenues increased three per cent to C$3,222 million. Carloadings and revenue ton-miles each declined by six per cent.
- CN's operating ratio for Q3-2015 improved by five percentage points to a record 53.8 per cent.
- Free cash flow for the first nine months of 2015 was C$1,741 million, compared with C$2,045 million for the year-earlier period. (1)
"We remain committed to our long-term agenda of Operational and Service Excellence, investing in the safety and integrity of our network, and fulfilling our role as a true backbone of the economy.
"With CN's continued strong performance this year, we are pleased to reaffirm our outlook for double-digit adjusted EPS growth in 2015 versus last year's adjusted diluted EPS of C$3.76." (1) (2)
Foreign currency impact on results
Although CN reports its earnings in Canadian dollars, a large portion of its revenues and expenses is denominated in U.S. dollars. The fluctuation of the Canadian dollar relative to the U.S. dollar affects the conversion of the Company's U.S.-dollar-denominated revenues and expenses. On a constant currency basis, CN's net income for the third quarter of 2015 would have been lower by C$107 million(C$0.13 per diluted share). (1)
Third-quarter 2015 revenues, traffic volumes and expenses
Revenues for the third quarter of 2015 increased by three per cent to C$3,222 million. Revenues increased for automotive (13 per cent), forest products (12 per cent), intermodal (five per cent), petroleum and chemicals (three per cent), and grain and fertilizers (two per cent). Revenues declined for coal (13 per cent) and metals and minerals (three per cent).
The revenue performance was mainly attributable to the positive translation impact of the weaker Canadian dollar on U.S.-dollar-denominated revenues; freight rate increases; strong overseas intermodal demand, higher volumes of finished vehicle traffic, and increased shipments of lumber and panels to U.S. markets. These factors were partly offset by a lower applicable fuel surcharge rate; decreased shipments of coal due to weaker North American and global demand; reduced shipments of energy-related commodities including crude oil, frac sand and drilling pipe; lower volumes of semi-finished steel products and short-haul iron ore; as well as lower volumes of Canadian grain versus the prior year's record crop.
Carloadings for the quarter declined by six per cent to 1,393 thousand.
Revenue ton-miles, measuring the relative weight and distance of rail freight transported by CN, declined by six per cent over the year-earlier quarter. 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 by 10 per cent over the year-earlier period, driven by the positive translation impact of the weaker Canadian dollar and freight rate increases, partly offset by a lower applicable fuel surcharge rate and an increase in the average length of haul.
Operating expenses for the quarter decreased by five per cent to C$1,735 million, mainly due to lower fuel costs and lower casualty and other expense, partly offset by the negative translation impact of a weaker Canadian dollar on U.S.-dollar-denominated expenses.
Update on recovery of President and CEO Claude Mongeau
Claude Mongeau had successful surgery in Montreal to remove a rare type of soft-tissue tumour. Mr. Mongeau underwent a procedure to remove his larynx and a voice prosthesis was placed in his throat. He is currently receiving radiation treatment and is expected to return to work early in the new year following his complete recovery.
"Claude is upbeat, recovering well, and remains engaged in the business," said Robert Pace, chairman of CN. "We wish him a speedy and full recovery as he focuses on his health.
"The Board has every confidence in the experienced leadership team to continue to deliver strong results, and all of us look forward to Claude's return."
Forward-Looking Statements
Certain information included in this news release constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements. To the extent that CN has provided guidance that are non-GAAP financial measures, the Company may not be able to provide a reconciliation to the GAAP measures, due to unknown variables and uncertainty related to future results. Key assumptions used in determining forward-looking information are set forth below.
2015 key assumptions
CN has made a number of economic and market assumptions in preparing its 2015 outlook. The Company is assuming that North American industrial production for the year will increase by approximately one per cent and is now assuming U.S. housing starts in the range of 1.1 million units and U.S. motor vehicle sales of approximately 17 million units, versus its previous (July 20, 2015) assumptions of 1.2 million and 16.7 million, respectively. The 2014/2015 Canadian grain crop represented a significant reduction toward the historical trend line after a record 2013/2014 grain crop, while the 2014/2015 U.S. grain crop was above trend. For the 2015/2016 crop year, the Company now assumes that the Canadian grain crop will be below the five-year average and that the U.S. grain crop will be above the five-year average, compared with its previous assumption that both crops would be in-line with trend yields. CN also now expects 2015 customer shipments of energy-related commodities, namely crude oil and frac sand, to be below 2014 levels, versus its previous assumption of no growth. With these assumptions, CN now assumes total carloads for all freight categories in 2015 will be approximately 2 per cent below 2014 levels, compared with its previous assumption that 2015 shipments would be comparable with those in 2014. CN expects continued pricing improvement above inflation. CN now assumes that in 2015 the value of the Canadian dollar in U.S. currency will be in the range of $0.75 to $0.80, and that the average price of crude oil (West Texas Intermediate) will be in the range of US$45 to US$50 per barrel, versus its previous assumptions of approximately $0.80 and US$50 per barrel, respectively. In 2015, CN plans to invest approximately C$2.7 billion in its capital program, of which approximately C$1.4 billion is targeted toward maintaining the safety and integrity of the network, particularly track infrastructure.
Important risk factors that could affect the forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CN's annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risk factors.
CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement.
1) See discussion and reconciliation of non-GAAP adjusted performance measures in the attached supplementary schedule, Non-GAAP Measures.
2) See Forward-Looking statements for a summary of the key assumptions and risks regarding CN's 2015 outlook.
This earnings news release, as well as additional financial information, including the Financial Statements, Notes thereto and Management's Discussion and Analysis, is contained in the CN Quarterly Review available on the Company's website atwww.cn.ca/quarterly-releases and on SEDAR at www.sedar.com as well as on EDGAR at www.sec.gov.
CN is a true backbone of the economy whose team of approximately 25,000 railroaders transports more than C$250 billion worth of goods annually for a wide range of business sectors, ranging from resource products to manufactured products to consumer goods, across a rail network of approximately 20,000 route-miles spanning Canada and mid-America. CN - Canadian National Railway Company, along with its operating railway subsidiaries - serves the cities and ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax,New Orleans, and Mobile, Ala., and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth, Minn./Superior, Wis., and Jackson, Miss., with connections to all points in North America. For more information about CN, visit the Company's website at www.cn.ca.
Last edited by a moderator:
