(Montreal) The Canadian National Railway Company lowered its forecast for the current fiscal year, as it announced lower results for its first quarter on Tuesday.
Posted at 5:25 p.m.
Referring to “difficult operating conditions” and “global economic uncertainty”, Canadian National indicated that it was now betting on growth in its adjusted earnings per share of between 15% and 20%, compared to its target. of 20% announced at the beginning of the year.
“We will bring this company back to best-in-class,” said Tracy Robinson, who joined the team as CEO on February 28. She joined from TC Energy, where she ran the energy company’s gas pipeline business.
“There was a big shock in the supply chain. And we are working very hard to find our rhythm, ”explained Mme Robinson to analysts on a conference call.
The country’s largest rail carrier said its revenue for the quarter ended March 31 rose 5% from the same period last year. Revenues were boosted by freight rate increases and higher US grain export volumes.
However, a smaller Canadian grain harvest, lower west coast container traffic, global supply chain disruptions and harsher winter weather ultimately contributed to a 6% drop in net income in the most recent trimester.
“Challenging weather conditions – primarily in Western Canada – and supply chain disruptions impacted our ability to take full advantage of strong demand environments in the first quarter. War-related uncertainty in Ukraine and sustained pandemic disruptions in China and elsewhere all suggest a bit of caution this year,” Ms.me Robinson.
Revenues from the weaker grain crop — typically CN’s biggest contributor to revenue, but which was surpassed in the most recent quarter by oil and chemicals — fell 15% from a year to year.
Supply bottlenecks — particularly in China, where COVID-19 lockdowns are wreaking havoc on manufacturing and shipping — have slowed container traffic on the West Coast.
Meanwhile, a freezing winter has further reduced freight capacity, as low temperatures impair a train’s air brake systems, forcing the carrier to use shorter trains, at slower speeds.
As a result, CN is now targeting an operating ratio – a measure of railroad efficiency that expresses expenses as a percentage of net sales – of just under 60%, compared to its previous target. , more ambitious, by 57%.
Looking for a French-speaking administrator
Earlier Tuesday, CN announced that its board of directors had met in the morning for the first time since the resignation of its only French-speaking director, former Quebec premier Jean Charest, and whom it would appoint “in the next few months” a “French-speaking Quebec” administrator. Mr. Charest left his position on 1er April to run for the leadership of the Conservative Party of Canada.
“CN, whose head office has been located in Montreal for more than 100 years, and its Board of Directors respect the company’s rich history in Quebec, where the official language is French, and take great pride in it,” said the chairman of its board of directors, Robert Pace, in a press release.
CN, like the former Crown corporation Air Canada, is subject to Canada’s Official Languages Act, which requires federal institutions to provide services in English or French upon request.
Language issues in the province’s business community came to the fore again in November, following comments from Air Canada CEO Michael Rousseau. During a press scrum, the latter made comments, including an admission of his inability to speak French, which sparked an outcry.
Upon her appointment as head of CN, Tracy Robinson, for her part, declared that she had started taking French lessons in order to be able to communicate with the carrier’s employees and customers and “to take full advantage of the experience of life in Quebec.
The country’s largest rail operator posted first-quarter net profit of 918 million, down from 976 million in the first three months of 2021.
Revenue reached 3.71 billion, compared to 3.54 billion obtained a year earlier.
On an adjusted basis, earnings per share rose to $1.32 from $1.23 a year ago. Analysts on average had expected slightly higher adjusted earnings per share of $1.38, according to financial data firm Refinitiv.