CN on July 25 reported revenues of C$4.057 billion for the three-months ended June 30, 2023, down 7% (a decrease of C$287 million) from the prior-year period. This was “mainly due to lower volumes of intermodal, crude oil, U.S. grain exports and forest products, primarily as a result of lower demand for freight services to move customer goods and customer outages caused by Canadian wildfires, lower ancillary services including container storage and lower fuel surcharge revenues as a result of lower fuel prices; partly offset by freight rate increases, the positive translation impact of a weaker Canadian dollar and higher export volumes of Canadian grain,” according to the Class I railroad.
Operating expenses for second-quarter 2023 were $C2.457 billion compared to $C2.575 billion for the same period in 2022. The decrease of $C118 million, or 5%, was “mainly due to lower fuel prices; partially offset by higher labor and fringe benefits expense mainly driven by higher average headcount and general wage increases and the negative translation impact of a weaker Canadian dollar,” according to CN.
Following are more highlights of CN’s second-quarter 2023:
- Operating income of C$1.600 billion, a decrease of C$169 million, or 10%.
- Operating ratio, defined as operating expenses as a percentage of revenues, of 60.6%, an increase of 1.3-points, or an increase of 1.6-points on an adjusted basis.
- Diluted EPS of C$1.76, a decrease of 8%, or a decrease of 9% compared to second-quarter 2022 adjusted EPS.
- Free cash flow for second-quarter 2023 was C$1.100 billion, an increase of C$103 million, or 10%.
- Free cash flow for the first half of 2023 was C$1.693 billion, an increase of C$125 million, or 8%.
- Injury frequency rate of 1.00 (per 200,000 person hours), an improvement of 17% and accident rate of 1.91 (per million train miles), a deterioration of 5%.
- Through dwell of 6.8 (entire railroad, hours), an improvement of 6%.
- Car velocity of 216 (car miles per day), an improvement of 3%.
- Through network train speed of 19.9 (mph), an improvement of 3%.
- Fuel efficiency of 0.888 (US gallons of locomotive fuel consumed per 1,000 gross ton miles (GTMs)), 6% less efficient.
- Train length of 7,934 (feet), a decrease of 6%.
- Revenue ton miles (RTMs) of 55,877 (million), a decrease of 8%.
2023 Outlook
In light of CN’s second-quarter results and revised expectation of “weaker than anticipated volumes” in the second half of 2023, CN says it is updating its full-year outlook and now expects “flat to slightly negative year-over-year growth in adjusted diluted EPS in 2023 (compared to the April 24, 2023, expectation of growth in the mid-single digits).”
CN says it “reiterates its longer-term financial perspective and continues to target compounded annual diluted EPS growth in the range of 10%-15% over the 2024-2026 period driven by growing volumes more than the economy, pricing above rail inflation and incrementally improving efficiency, all of which assumes a supportive economy.”
For more details, visit the investors’ section of CN’s website.
