CN Steams Through 4th quarter

OTTAWA -- Canadian National Railway Co. paid little heed to the recession in the fourth quarter, posting a 25% increase in profit, the National Post reports.

While the railway's earnings were inflated by the acquisition of the Wisconsin Central Transportation Corp., it also managed to control costs while finding 10% more revenue.

In the quarter, CN reported net income of $296-million ($1.48 a share), compared with $237-million ($1.20) a year earlier. Revenue rose to $1.54-billion from $1.39-billion.

Of that, the acquisition of WC, effective on Oct. 9, contributed net income of $17-million (8) and $129-million of additional revenue.

"The more we look at this company the synergies are very promising," Paul Tellier, president and chief executive, said during a media conference call.

In the quarter, six of the company's seven business units gained revenue. They were led by metals and minerals, up 38%; intermodal fell 1%. Mr. Tellier boasted about the railway's cost-cutting efforts, made all the more challenging because CN's original business plan was predicated on 3% economic growth and it had to quickly adjust for only 1% growth.

The company's operating ratio, a measure of efficiency based on the percentage of revenue needed to run the railway, improved by 2.2 points in the quarter to an industry leading 66.1%.

Asked if the success of the WC acquisition had whet his appetite for more, Mr. Tellier said CN continually reviews its strategic options, including acquisitions.

"We have the responsibility to not only grow earnings per share on a quarterly basis but look also at the broader picture," he said. "If there is something available which would be a win-win situation we would be looking at it. We, on an ongoing basis, are reviewing a menu of strategic options."

For the year, CN had income of $978-million on an adjusted basis excluding a total of $62-million in special items, including the sale of its Detroit River Tunnel interest, deferred income tax recovery and a charge for workforce reductions and writedown of its investment in 360networks Inc. That's up from $879-million a year earlier. Excluding one-time items, CN had income of $1.04-billion ($5.23), up from $937-million ($4.67) in 2000. Revenue was $5.65-billion, up from $5.43-billion.