Increased grain revenue helped CN improve its revenue picture and offset rising costs in its second fiscal quarter ending June 30.
The railway on Monday posted $459 million in 2008 Q2 net income on $2.098 billion in total revenue, an 11 per cent drop in net income and four per cent gain in revenue compared to the year-earlier period.
“Operations performed very well, and we saw revenue gains across most of our commodity groups, although the gains only partly helped to offset spiralling fuel costs that rose 60 per cent year over year to almost $400 million,” said CEO Hunter Harrison in the company’s release Monday.
On top of rising fuel, material and service costs, which raised operating expenses for the quarter by 14 per cent, the rising loonie also played a role, by itself cutting into Q2 net income by about $25 million, the company said.
Five of CN’s commodity groups posted revenue gains in the quarter, led by intermodal (14 per cent), coal (eight per cent), petroleum and chemicals (seven per cent), metals and minerals (six per cent) and grain and fertilizers (four per cent). Forest products and automotive revenues dropped 14 and 13 per cent respectively.
Revenue ton-miles (RTMs), which gauge the relative weight and distance of CN rail freight, dropped two per cent overall, while total rail freight revenue per RTM — that is, revenue earned on the movement of a ton of freight over one mile — rose four per cent, mainly due to freight rate hikes partly offset by the rising Canadian dollar.
By itself, the grain and fertilizers sector took in $334 million in Q2 revenue, up four per cent from the year-earlier period. RTMs for grain and fertilizers dropped one per cent, while rail freight revenue per RTM rose four per cent to 3.12 cents.
Grain and fertilizer carloads were up just one per cent at 148,000 for the quarter, meaning just a two per cent rise in Q2 rail freight revenue per carload, to $2,257.