Canadian National Rail (CNI 80.95, +0.64) is higher by 0.8% after reporting mixed quarterly results and issuing cautious guidance.
The rail carrier reported below-consensus fourth quarter earnings of CAD1.20 per share on a 2.1% year-over-year increase in revenue to CAD3.29 billion, which was a touch ahead of market expectations.
Looking ahead, the carrier expects that earnings for fiscal year 2018 will be between CAD5.25 and CAD5.40 per share, which is shy of market expectations. The company aims to spend CAD3.20 billion on safety and efficiency improvements during fiscal year 2018. This is expected to include the acquisition of 60 new locomotives, track infrastructure expansion, and improvements at intermodal terminals.
While the company's earnings and guidance did not live up to expectations, the disappointment has been somewhat offset by news of a 10.0% quarterly dividend increase to CAD0.455 per share.
Reviewing fourth quarter results, Canadian National Rail's operating ratio improved 3.8 points to 60.4% while revenue ton-miles grew 1.0% with carloads rising 7.0%.
The company's 2.1% increase in revenue was driven by a 20.5% year-over-year increase in Metals and Minerals revenue to CAD377 million. Intermodal revenue increased 13.3% to CAD816 million. Coal revenue (+6.6% to CAD145 million) and Automotive revenue (+0.5% to CAD188 million) also increased while revenue in the remaining segments declined.
Grain and Fertilizers revenue fell 9.6% to CAD585 million while Petroleum and Chemicals revenue fell 5.1% to CAD543 million. Forest Products revenue contracted 2.2% to CAD437 million.