Canadian National [yesterday] reported its financial and operating results for the third quarter ended September 30, 2020.
“CN’s people never stopped working since the beginning of the pandemic and I am proud of the essential transportation service they have provided. As we look at the fourth quarter and beyond, we continue to see sequential improvements and momentum leading us to have a cautious optimism about the future. We remain confident in our ability to continue delivering long-term shareholder value.”
– JJ Ruest, President and Chief Executive Officer of CN
Financial results highlights
Third-quarter 2020 compared to third-quarter 2019
- Volumes, in terms of revenue ton miles (RTMs), improved sequentially in each month of the third quarter of 2020 and September volumes increased on a year-over-year basis, reflecting demand for certain commodities in-line with 2019 levels.
- Revenues of C$3,409 million, a decrease of C$421 million or 11 per cent.
- Diluted earnings per share of C$1.38, a decrease of 17 per cent.
- Operating ratio of 59.9 per cent, an increase of 2.0 points.
- Operating income of C$1,366 million, a decrease of 15 per cent.
- Free cash flow for the first nine months of 2020 was C$2,087 million, an increase of C$588 from the prior period. (1)
Third-quarter 2020 revenues, traffic volumes and expenses
Revenues for the third quarter of 2020 were C$3,409 million, a decrease of C$421 million or 11 per cent, when compared to the same period in 2019. The decrease in revenues was mainly due to lower volumes across most commodity groups caused by the ongoing effects of the COVID-19 pandemic and lower applicable fuel surcharge rates, partly offset by freight rate increases as well as increased shipments of Canadian grain. RTMs, measuring the relative weight and distance of freight transported by CN, declined by seven per cent from the year-earlier period. Freight revenue per RTM decreased by three per cent over the year-earlier period.
Operating expenses for the third quarter decreased by eight per cent to C$2,043 million, mainly driven by lower fuel and labor costs, as well as decreased purchased services and material expense. The decrease in the first nine months was partly offset by a loss on assets held for sale in the second quarter, resulting from the Company’s decision to market for sale for on-going rail operations, certain non-core lines.