OTTAWA -- Canadian National Railway Co. chief Paul Tellier said
the recent acquisition of Wisconsin Central Transportation Corp. is
surpassing expectations and helped the railway to post an
11-per-cent profit increase for 2001, according to the Globe and
"We are very pleased with this transaction and the synergies. The more we look at this company, the synergies are very promising," Mr. Tellier, CN's president and chief executive officer, told reporters yesterday.
CN posted a profit of $1-billion or $5.41 a share for the year, up from $937-million or $4.81 in 2000. Revenue was $5.7-billion, up 4 per cent from 2000's $5.4-billion.
Although he remains cautious about the economic prospects for 2002, Mr. Tellier said CN will see its profit rise again this year. He said he will provide further guidance today in meetings with analysts.
For the fourth quarter, CN's profit was $296-million or $1.54 a share compared with $237-million or $1.24 a year earlier. Revenue was $1.5-billion compared with $1.4-billion.
"We are very pleased to report both a very strong performance in Q4 and a very good year in 2001 . . . despite the effects of Sept. 11 and the slowdown in the economy," Mr. Tellier said.
CN said its acquisition of Wisconsin Central, which took effect Oct. 9, added $17-million or 9 cents a share to the company's bottom line.
Despite the inclusion of Wisconsin Central in its results, CN realized the most efficient fourth quarter in its history. CN's operating ratio -- the key measure of a railway's operating efficiency -- fell to 66.1 in the quarter from 68.3 a year earlier. Operating ratio is the inverse of the operating margin -- operating expenses divided by operating revenue, and the lower the better.
On Monday, rival Canadian Pacific Railway Ltd. announced a profit of $410.4-million for 2001. The railway's results were down 23 per cent from 2000, largely because of one-time items, many of which were related to the company's transformation into an independent company. CPR's operating ratio was 72.5 in the quarter.
In a presentation to analysts yesterday, CPR president Robert Ritchie said the railway is bracing for a weak first half of 2002, with a modest recovery expected in the last six months of the year.
He said CPR's efforts to cut costs put the company in a good position to weather the downturn, but that the railway still has further to go in its cost-cutting efforts.
CPR also made preliminary estimates of the costs to clean up this week's train derailment in Minot, N.D., which killed one man and injured dozens of others when anhydrous ammonia spilled from seven tankers.
The total bill could be in the range of $20-million to $30-million, but much of the cost is expected to be picked up by insurance providers, leaving CPR's exposure at $10-million to $12-million before tax.