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Third-quarter grain handle down for CN, CP

Grain segment revenue per carload up for both railways

Canada’s Big Two railways both booked reduced traffic but increased their revenue per carload in their grain handling segments for their third fiscal quarters ending Sept. 30.

Canadian National Railway on Tuesday reported third-quarter net income of $1.195 billion on $3.83 billion in total revenues, up from $1.134 billion on $3.688 billion in the year-earlier period.

Canadian Pacific Railway on Wednesday reported $618 million in net income on what it reported as a “record” in Q3 total revenue of $1.979 billion, down from $622 million on $1.898 billion in the previous Q3.

During the quarter, Calgary-based CP moved about 106,600 carloads of grain, down from 107,400 in its year-earlier Q3, and 14,800 carloads of fertilizers and sulphur, up from 13,800. It booked revenue per carload of $3.837 for grain, up eight per cent, and $4,459 for fertilizer and sulphur, up 13 per cent from the year-earlier Q3.

Montreal-based CN, which lists grain and fertilizer traffic as a single market segment, reported moving 145,000 carloads of grain and fertilizer during its third quarter, down from 156,000 in last year’s Q3. It also reported revenue per carload of grain and fertilizers at $3,807, up five per cent.

More generally, both railways’ quarterly reports cite what CN described as “deterioration in North American rail demand, as the economy continues to weaken.”

“CN delivered strong results, despite a softening economy,” CN CEO J.J. Ruest said Tuesday in the company’s Q3 release, adding the company “aligned resources with the weaker demand to achieve solid efficiency gains.”

CP CEP Keith Creel, in that company’s release Wednesday, said the company’s approach “puts us in a position to control what we can as we navigate softer volumes, macroeconomic challenges and geopolitical tensions into the fourth quarter.”

While CP now expects low-single digit growth in volumes handled, Creel said, “we remain confident in our guidance to deliver full-year double-digit adjusted diluted EPS (earnings per share) growth.”

Looking ahead on the rest of fiscal 2019, CN said its outlook assumes a 2019-20 grain crop in Canada “in line with the three-year average” and that the U.S. 2019-20 crop will come in below the three-year average. –– Glacier FarmMedia Network

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