A larger grain handle and higher grain revenue have helped boost Canadian National Railway’s (CN) first-quarter bottom line.
Montreal-based CN last week booked profit of $668 million on $2.084 billion in gross revenue for the three months ending March 31, up from $511 million on $1.965 billion in the year-earlier period.
Grain and fertilizer revenue for the quarter totalled $406 million, up nine per cent from $372 million in the previous Q1. The railway handled 160,000 carloads of grain and fertilizers during the quarter (up from 146,000), for rail freight revenue per carload of $2,538, down just $10 per carload from the 2010 Q1.
By comparison, CN grossed $2,769 per carload of forest products in its latest Q1, and $2,443 per carload in its petroleum and chemicals commodity group. Intermodal carloads grossed an average of $1,114 each, while metals and minerals travelled for $972.
CN said its rise in first-quarter revenues mainly resulted from higher freight volumes as a result of further improvements in North American and global economic conditions; freight rate increases; and the impact of a higher fuel surcharge due to year-over-year increases in applicable fuel prices and higher volumes.
Those factors, the company said, were “partly offset” by the negative translation impact of the stronger Canadian dollar on U.S.-dollar-denominated revenues.
CN CEO Claude Mongeau said the company was able to pull off better results “despite a very challenging winter” thanks to improved economies in North America and worldwide, but also thanks to “a well-executed winter operating plan.”
In its revised outlook for the remainder of 2011, CN said it assumes a weaker 2010-11 Canadian grain crop, partly offset by a higher carryover stock, and a 2011-12 Canadian grain crop “in line with the five-year average.”
CN, in a separate release Tuesday, said it has logged noteworthy improvements in its service to Saskatchewan’s potash mining sector, through a “Scheduled Potash Service” program.
“By scheduling potash service, we have reduced car cycle times for privately owned hoppers from mine to destination and return to mine for loading by approximately 25 per cent,” CN chief marketing officer Jean-Jacques Ruest said in the release.
“This improvement helps our potash customers get to market faster and move more bulk product. CN has also benefited from the additional capacity provided by these efficiency gains.”
CN said it had set up a new potash fleet management team to work with customers to improve distribution of empty private hopper cars to mines for reloading.
“This initiative, with locomotives cycling between CN’s potash hub in Winnipeg and mines in Saskatchewan, has reduced switching requirements and car dwell times at terminals,” the company said. “As a result, CN has significantly reduced car cycles from mine to destination and return.”
CN described itself as a “significant player” in the Canadian rail market for fertilizers, with production centred mainly in Western Canada. The company serves, or has access to, all major potash mines in Saskatchewan, and most Canadian potash moves by rail to markets in the U.S. or to port for overseas export.