Description

Canadian National Railway’s Network Is Positioned to Capture the Next Wave of Canadian Export Growth; But What Are The Challenges?

The earnings results and subsequent discourse reflect a mixed picture for Canadian National Railway Company (CN). The company has delivered solid financial performance in certain areas, but faces ongoing challenges due to softer-than-expected volumes, macroeconomic headwinds, and tariff impacts. On the positive side, CN posted a 6% increase in EPS and improved its operating ratio by 170 basis points to 61.4% compared to the previous year. The company attributes this to their focus on cost management and operational efficiencies, evidenced by reduced contractor usage and overtime, as well as improvements in train operations metrics such as car velocity and locomotive availability. The strategy appears to be yielding results, with Q3 free cash flow up by 14% year-to-date. Despite the positive financial metrics, challenges persist. CN faces a challenging volume environment primarily due to weaker North American industrial production and unfavorable tariff impacts, particularly affecting the forest products sector.