Despite recession hurdles on the horizon, Canadian National Railway Co. says the tracks are clear for a smooth year after reporting record second-quarter revenues alongside profits that surged past expectations due largely to a spike in crude oil and container sales.
Net income jumped 28 per cent or $289 million to $1.33 billion in the quarter ended June 30 versus the same period last year, the Montreal-based company said Tuesday. Revenues rose 21 per cent or $746 million to $4.34 billion last quarter compared with a year earlier.
"U.S. grain and coal continues to remain strong due to the unfortunate war in Ukraine and the sanctions on Russia," CN chief marketing officer Doug MacDonald told analysts on a conference call. The coming crop year looks "normalized," added chief operating officer Rob Reilly. "But we're also going to lean in to more fully utilizing the other parts of the network, densifying the eastern region and the southern regions. This will strengthen our business, our resilience. It's going to drive stronger returns."
Supply chain snarls remain a thorn in CN's side, as warehouse bottlenecks caused by a lack of storage facilities and truckers slow the flow of import containers bound for Montreal and Toronto. However, he said traffic flow has "dramatically improved" after CN set up new storage locations in Canada's two biggest cities and worked to speed up processing times from shipping and short-haul delivery companies.
CN affirmed its earnings forecast of between 15 per cent and 20 per cent growth in adjusted diluted earnings per share for 2022, after lowering its outlook from a target of 20 per cent three months ago.
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