Canadian National Railway Q4 Results Top Estimates; Boosts Dividend 25%

(RTTNews) - Canadian railroad operator Canadian National Railway Co. (CNI, CNR.TO) reported Tuesday a profit for the fourth quarter that increased 33 percent from last year, reflecting revenue growth amid higher freight volumes and freight rate increases. Both earnings per share and quarterly revenue topped analysts' expectations. Separately, the company's board approved a 25 percent increase in quarterly cash dividend.

"CN delivered a strong fourth-quarter 2014 performance, concluding a remarkable year characterized by brutal first-quarter winter weather, followed by a strong rebound starting in March, and capped by record full-year freight volumes," President and CEO Claude Mongeau said in a statement.

The Montreal, Canada-based company reported net income of C$844 million or C$1.03 per share for the fourth quarter, higher than C$635 million or C$0.76 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was C$1.03 per share, compared to C$0.75 per share in the year-ago quarter. On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of C$0.97 per share for the quarter. Analysts' estimates typically exclude one-time items.

On a constant currency basis that excludes the impact of fluctuations in foreign currency exchange rates, the company's net income would have been lower by C$0.06 per share.

Revenues for the quarter grew 17 percent to C$3.21 billion from C$2.75 billion in the same quarter last year, and topped thirteen Wall Street analysts' consensus estimate of C$3.10 billion.

Rail freight revenues grew 17 percent to C$3.02 billion from C$2.58 billion in the year-ago quarter.

The company noted that quarterly revenues increased across all transported products, with double-digit growth in six of the seven products.

Carloadings for the quarter rose 11 percent from the year-ago period to a record 1,448 thousand. Revenue ton-miles, measuring the relative weight and distance of rail freight transported by the company, increased 9 percent from the prior-year period to 59.78 billion.

Rail freight revenue per revenue ton-mile, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, grew 7 percent to 5.04 cents from last year. Total rail freight revenue per carload also increased 5 percent to C$2,082 from last year.

Operating income increased 30 percent to C$1.26 billion, and operating ratio improved by 410 basis points to 60.7 percent from a year ago.

"We're particularly proud of our solid operating performance that allowed us to move record volumes of Western Canadian grain and equally strong U.S. grain shipments," Mongeau added.

Separately, the company's board also approved a 25% increase in first-quarter cash dividend to C$0.3125 per common share, payable on March 31 to shareholders of record at the close of business on March 10, 2015. The company said it has increased its dividend per share by 17 percent per year on average since its privatization in 1995.

Looking ahead to fiscal 2015, the company said it expects to deliver double-digit earnings per share growth compared to last year's adjusted 2014 earnings of C$3.76 per share. The company also plans to increase its capital spending by about C$300 million for a total 2015 investment of about C$2.6 billion. Street is currently looking for full-year 2015 earnings of C$4.22 per share.

CNI closed Tuesday's regular trading session at $68.50, down C$0.04 or 0.06% on a volume of 1.91 million shares. However, the stock gained $2.22 or 3.24% in after-hours trading.

CNR.TO closed on the Toronto stock exchange at C$85.16, down C$0.28 or 0.33% on a volume of 1.13 million shares.