CN SECOND-QUARTER EARNINGS DIP DUE TO ONE-TIME CHARGES
Canadian National said non-recurring items, including charges for a 3-percent cut in work force and writing off an investment, caused a 5.6-percent drop in second-quarter net income, to Can $217 million ($140.5 million).
CN took an after-tax charge of Can $62 million ($44.0 million) for its work force adjustment program, which has cut about 345 of what is expected to be 690 positions affected by 2002. The charge included severance and other payments for the former employees, the majority of which are non-union.
The Montreal-based railroad also took a Can $71-million ($45.9 million) after-tax charge for writing down its investment in 360networks Inc., which filed for protection from creditors in Canada and the United States last month.
Those charges were partially offset by a Can $110-million ($71.2 million) deferred income tax recover resulting from the enactment of lower Canadian corporate tax rates.
Operating income for the railroad, excluding the work force reduction charge, rose 6 percent to Can $444 million ($287.5 million). Operating expenses also rose 4 percent, to Can $948 million ($613.8 million). CN's operating ratio improved by half a point to 68.1 percent. Carloadings improved 1 percent to 947,000.
Revenue rose 4 percent to Can $1.39 billion ($901.3 million), as five of CN's seven business units saw revenue gains: metals and minerals, up 13 percent; grain and fertilizers, 10 percent; intermodal, 9 percent; forest products, 7 percent; and coal, 1 percent. Revenue for automotive declined 9 percent and petroleum an chemicals fell 1 percent.
For the first half of 2001, net income was Can $492 million ($318.6 million), including the non-recurring second-quarter items and a first-quarter Can $73-million after-tax gain from the sale of CN's 50-percent interest in the Detroit River Tunnel Co. This compares to Can $26 million ($275.8 million) in the first half of 2000, which included a Can $58-million after-tax gain related to CN's investment in 360networks.
Operating income for the first half of 2001, excluding the work forc3e adjustment charge, rose 4 percent to Can $829 million ($536.7 million), while the operating ratio improved slightly to 70.3 percent. Carloadings were flat at 1.9 million.
First-half revenues rose 3 percent to Can $2.79 billion ($1.81 billion), while revenue rose in all business units except automotive.
