Canadian railway CN’s (NYSE: CNI) net income for the fourth quarter of 2020 rose 14% year-over-year amid a 2% increase in revenue and a 5% decrease in operating expenses.
Fourth-quarter 2020 adjusted net profit was CA$1.02 billion, or $1.43 adjusted earnings per share, compared with $896 million, or $1.25 adjusted earnings per share, for the fourth quarter of 2019. All figures are in Canadian dollars, and 1 Canadian dollar equals about 79 cents in U.S. dollars.
The 2% increase in revenue to nearly $3.66 billion year-over-year was attributable to record shipments of Canadian grain, increased shipments of U.S. grain, higher intermodal container traffic via the Port of Vancouver and freight rate increases, CN said. These gains were partly offset by lower applicable fuel surcharge rates and lower volumes of petroleum crude, the railway said.
Meanwhile, operating expenses fell 5% to nearly $2.25 billion on lower fuel costs and lower purchased services and materials expense.
Adjusted operating ratio (OR) for the fourth quarter was 61.4%, compared with 65.2% in the fourth quarter of 2019. Investors sometimes use OR to gauge the financial health of a company, with a lower OR implying improved financial health. OR is a company’s expenses as a percentage of revenue.
Service metrics were mixed, with network train speed at 18.4 mph, compared with 19.2 mph in the fourth quarter of 2019, and through dwell at 8 hours versus 8.1 hours year-over-year. CN defines through dwell as the average time a railcar resides within a terminal. Train length was 8,514 feet compared with 8,371 feet in the fourth quarter of 2019.
CN expects to spend $3 billion in capital investments in 2021, of which $1.6 billion will go toward track and railway infrastructure maintenance. It also expects earnings-per-share growth for the year in the “high single-digit range” and “mid-single-digit volume growth” in terms of revenue ton miles, the company said in a release.
“While the recovery remains uneven across the markets we serve, we are pleased by the momentum in volume demand that grew during the fourth quarter and continues to grow. We are increasingly optimistic about 2021 and we are reinstating our full-year financial outlook,” said CN President and CEO JJ Ruest.
| CN ($ in Canadian dollars) | 2020 Value | 2019 Value | Y/Y Gross Change | Y/Y % Change |
| Freight revenue (in millions) | $3,507.0 | $3,408.0 | $99.0 | 2.9% |
| Carloads (includes intermodal) (000s) | 1,526 | 1,425 | 101.00 | 7.1% |
| Revenue per carload | $2,298 | $2,392 | -$94.00 | -3.9% |
| Intermodal shipments (000s) | 731 | 638 | 93.00 | 14.6% |
| Intermodal revenue per carload | $1,417 | $1,453 | ($36.0) | -2.5% |
| Revenue tonmile (in millions) | $63,207 | $57,709 | $5,498.0 | 9.5% |
| Employee counts (quarterly average) | 24,272 | 26524 | -2,252.00 | -8.5% |
| Network train speed (mph) | 18.4 | 19.2 | -0.80 | -4.2% |
| Through dwell time (hours) | 8 | 8.1 | -0.10 | -1.2% |
| OR% (on an adjusted basis) | 61.4% | 65.2% | -3.80% | -5.8% |
| EPS (on an adjusted basis) | $1.43 | $1.25 | $0.2 | 14.4% |
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