MONTREAL — Canadian National Railway raised its outlook for the year after profits increased 12 per cent on record first-quarter volumes, helped by an increase in Western Canadian grain.
The Montreal-based railway said Monday it expects to earn between $4.95 and $5.10 per adjusted diluted share for the year, an increase of eight to 11 per cent from last year. In January it forecast a growth of around five per cent.
It expects revenue-ton mileage volume will grow about 10 per cent compared to three to four per cent in 2016.
CN (TSX:CNR) also increased its capital spending program by $100 million to $2.6 billion, including $1.6 billion for track infrastructure. The extra money will be used to purchase 22 high-horsepower locomotives and other projects.
The revision came as CN Rail earned $884 million, or $1.16 per diluted share for the three months ended March 31, compared to $792 million or $1 per share a year earlier.
Excluding one-time costs, it earned $879 million or $1.15 per share.
Revenues grew eight per cent to $3.21 billion.
The country’s largest railway’s volumes were helped by a 14 per cent increase in grain shipments despite demanding winter conditions.
“Obviously a very strong start to the year,” CEO Luc Jobin said during a conference call from Regina, where the company will hold its annual meeting on Tuesday.
He said the railway was helped by improving commodity prices and growth in a number of sectors, including potash, frac sand, intermodal, coal, grain and automotive.
“We’ve been known to be a tad conservative, but when we see it and we can touch it and we can feel it, we are confident that we can nail it. And so with that in mind, that’s why we raised our guidance,” he told analysts.
Higher revenues were led by coal (up 39 per cent), grain and fertilizers (16 per cent), metals and minerals (16 per cent), automotive (10 per cent), intermodal (seven per cent), and petroleum and chemicals (one per cent). Forest product revenues declined three per cent.
Grain volumes rose 14 per cent as the railway moved 55 per cent of Canadian grain in the quarter, up from 51 per cent from the same period last year.
CN Rail was expected to earn $1.13 per share in adjusted profits on $3.21 billion of revenues, according to analysts polled by Thomson Reuters.
The railway says its operating ratio, which measures its efficiency, deteriorated by 0.5 of a percentage point on higher fuel prices.
CN said its net income would have been $22 million higher had the Canadian dollar been at the same level as last year.
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