“Our ‘Make the Plan, Run the Plan, Sell the Plan’ approach continued to perform well, delivering strong customer service despite weak consumer demand as well as external challenges,” Robinson said. “As volumes continue to improve, we are well positioned to deliver incremental operating leverage. We remain confident in our ability to accelerate sustainable, profitable growth in 2024 through 2026.”
3Q23 Financial Performance
For CN, third-quarter 2023 revenues came in at C$3.987 billion, down 12% or C$526 million, compared with the prior-year period’s C$4.513 billion. The railroad said the decrease was “mainly due to lower fuel surcharge revenues as a result of lower fuel prices, lower volumes of intermodal, crude oil and forest products, primarily as a result of lower demand for freight services to move consumer goods and the negative impact of the pacific coast dock workers strike, unfavorable crude oil price spreads and weaker market conditions for lumber and panels as well as lower ancillary services including container storage; partly offset by freight rate increases, higher volumes of Canadian grain and potash and the positive translation impact of a weaker Canadian dollar.” For the first nine months of 2023, revenues were C$12.357 billion, a fall-off of 2% or C$208 million from the same point last year.
Operating income for third-quarter 2023 was C$1.517 billion, down 21% or C$415 million from the same quarter last year. For the first nine months of 2023, it was C$4.779 billion, down 3% or C$149 million.
Among other performance highlights:
- For the three months ended Sept. 30, 2023, CN’s operating ratio was 62.0%, an increase of 4.8 points over the same quarter last year. For the first nine months of the year, it was 61.3%, up 0.5 points from the same period in 2022 or up 0.7 points on an adjusted basis.
- Diluted earnings per share (EPS) came in at C$1.69 for third-quarter 2023, a decrease of 21% from 2022, and C$5.27 for the first nine months of 2023, a decrease of 1% from the same period in 2022 or a decrease of 2% on an adjusted basis.
- CN reported third-quarter 2023 operating expenses of C$2.470 billion, down 4% or C$111 million from third-quarter 2022’s C$2.581 billion, which the railroad said was “mainly due to lower fuel prices; partly offset by the negative translation impact of a weaker Canadian dollar.”
- Carloads for the quarter (in thousands) were 1,326, down 10% from 1,469 in third-quarter 2022. For the first nine-months of 2023, they came in at 4,048, down 6% from 4,289 in the year-earlier period.
3Q23 Operating Performance
CN reported an injury frequency rate of 1.07 (per 200,000 person hours) for third-quarter 2023, a deterioration of 6% from third-quarter 2022, and 1.02 (per 200,000 person hours) for the first nine months of 2023, an improvement of 11% from the same period last year.
The railroad’s accident rate for the quarter was 1.86 (per million train miles), a 10% deterioration from 2022, and 1.76 (per million train miles) for the first nine months of 2023, a 16% improvement from 2022.
Among other operating highlights:
- Through dwell was 7.1 (entire railroad, hours) for the third quarter, deteriorating 1%, and 7.0 (entire railroad, hours) for the first nine months, improving 10% from 2022.
- Car velocity came in at 209 (car miles per day) for the quarter, falling 1% from 2022, and 212 (car miles per day) for the first nine months of the year, improving 10% from the same point in 2022.
- Through network train speed was 19.7 (mph) for the quarter, a deterioration of 2% from third-quarter 2022, and 19.9 (mph) for the first nine months of the year, an improvement of 7% from 2022.
- Fuel efficiency was 0.832 (U.S. gallons of locomotive fuel consumed per 1,000 gross ton miles) for the quarter, improving 1% from 2022, and 0.874 (U.S. gallons of locomotive fuel consumed per 1,000 gross ton miles) for the first nine months of the year, less efficient by 2% compared with the same period in 2022.
- Train length came in at 7,927 (feet) for the quarter, a decrease of 3% from 2022, and 7,870 (feet) for the first nine months of 2023, declining 5% from the same point in 2022.
- Third-quarter revenue ton miles (RTMs) of 55,640 (millions), a decrease of 5% from the year-earlier period. For the first nine months of 2023, RTMs were 171,478 (millions), a decrease of 2% from the same period last year.
2023 Financial Outlook
CN said that it continues to expect “flat to slightly negative year-over-year growth in adjusted diluted EPS in 2023.” The Class I also reiterated its longer-term financial perspective and said it “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 CN Investors webpage.
