CN Rail boosts dividend after Q4 profits rise, but also warns more job cuts possible

MONTREAL -- Canadian National Railway says it could shed more employees in 2016 if freight volumes fall again this year as expected.

See Full Article

The country's largest railway saw its workforce decrease by nine per cent or 2,300 last year, with about 1,150 employees laid off at year's end.

CN Rail, with about 25,000 employees, said its natural attrition rate of close to eight per cent annually gives it flexibility to hire or not depending on market conditions.

Unlike CP Rail (TSX:CP), which last week estimated its workforce would be down close to 1,000 this year, CN Rail didn't put a number on the potential job cuts.

Chief executive Claude Mongeau said the Montreal-based carrier intends to remain the industry's efficiency leader as its operating ratio fell to a record low of 58.2 per cent in 2015 and 57.2 per cent in the fourth quarter.

"We manage resources and we manage them in line with volume and we don't know where the volume will be, but we are, as we did in 2015, committed to keep our efficiency levels up," said Mongeau, who has returned from a five-month medical leave to treat a pre-cancerous tumour in his larynx.

CN Rail (TSX:CNR) expects volume will be soft again in the beginning of 2016 before stabilizing later in the year.

Despite the challenges, it boosted its quarterly dividend by 20 per cent on anticipation that adjusted profits will grow by about five per cent above the $4.44 per share earned in 2015.

A quarterly dividend of 37.5 cents per share, up from 31 cents, will be paid March 31 to shareholders as of March 10. Since going public in 1995, the railway has declared 20 consecutive dividend increases, averaging 17 per cent per year.

The railway capped the challenging year by growing profits 11 per cent to $941 million or $1.18 per share in the fourth quarter.

That compares with $1.03 per share or $844 million a year earlier. Revenues decreased one per cent to $3.17 billion.

Analysts had expected the railway to earn $885.4 million or $1.11 per share in the quarter.

Carloadings declined eight per cent while revenue ton-miles declined five per cent because of a weakened Canadian economy.

The decrease in quarterly revenues was mainly attributable to lower shipments of energy related commodities in oil and gas, as well as semi-finished steel, iron ore, coal and U.S. grain, partially offset by the positive impact of a weaker Canadian dollar.

Revenues increased for 13 per cent for automotive, 12 per cent forest products, five per cent intermodal and one per cent for grain. Revenues declined 21 per cent for metals and minerals, 16 per cent coal and four per cent petroleum and chemicals.

For the full year, CN Rail earned $3.54 billion or $4.44 per share on $12.6 billion of revenues.



Advertisements

Latest Economic News

  • Ford expects its profits will fall in 2018

    Economic CTV News
    DETROIT -- Ford Motor Co. says its pretax earnings will likely fall in 2018 as U.S. sales soften, commodity costs increase and it invests heavily in new electric and hybrid vehicles. Ford expects to earn between $1.45 and $1.70 per share this year. Source
  • Valeant says California judge gives preliminary approval to Allergan settlement

    Economic CTV News
    LAVAL, Que. - Valeant Pharmaceuticals International Inc. says a U.S. District Court judge gave his preliminary approval Tuesday to a US$290-million settlement of lawsuits stemming from the unsuccessful attempted hostile takeover in 2014 of Botox maker Allergan Inc. Source
  • With a US$6B charge comes new thoughts about GE's future

    Economic CTV News
    BOSTON -- General Electric Co. is signalling it may undergo a more comprehensive transformation, a decade after breaking off substantial pieces of the multinational conglomerate in bid to a return it to its industrial roots. Source
  • GE to pay US$15B for past mistakes amid breakup speculation

    Economic CTV News
    SAN FRANCISCO -- General Electric Co. will pay US$15 billion to make up for the miscalculations of an insurance subsidiary as a new regime weighs future changes that could culminate in a breakup of a company conceived in the industrial age. Source
  • Carillion Canada says it's soldiering on despite U.K. parent's financial woes

    Economic CBC News
    A spokesman for the Canadian subsidiary of insolvent British construction giant and state contractor Carillion says it's business as usual in Canada despite the parent company's collapse on Monday. Cody Johnstone says that Carillion Canada is not in liquidation and its 6,000 employees in Canada continue to be paid, along with its subcontractors and suppliers. Source
  • McDonald's sets worldwide recycling goals

    Economic CTV News
    NEW YORK -- McDonald's says it aims to use all recycled or other environmentally friendly materials for its soda cups, Happy Meal boxes and other packaging by 2025. The world's biggest burger chain also wants all of its 37,000 restaurants worldwide to recycle customer waste by that year. Source
  • Canadian natural gas industry a 'sad story': analyst

    Economic CBC News
    A prominent commodities analyst struck a gloomy tone as he delivered a blunt assessment of the Canadian natural gas industry's fortunes this year, describing it as a "sad story." In front of a few hundred oilpatch members at the Calgary Petroleum Club in the city's downtown, commodities analyst Martin King admitted his Tuesday morning presentation for gas was one of his most negative. Source
  • Nutrien to sell Israel Chemical stake for expected US$700 million

    Economic CTV News
    SASKATOON -- Fertilizer giant Nutrien Ltd. says it plans to sell all of its holdings in Israel Chemicals Ltd. in a secondary share offering for an expected US$700 million. The sale comes as one of the requirements set out by global regulators for Potash Corp. Source
  • Australia files WTO complaint against Canadian wine sales measures

    Economic CTV News
    TORONTO - Australia has filed a complaint about Canada's rules around wine sales with the World Trade Organization. The complaint filed Friday argues that Canada's distribution, licensing and sales measures discriminate against imported wine. Source
  • Beer Canada calls on feds to axe increasing beer tax

    Economic CTV News
    OTTAWA -- A trade association for Canada's beer industry wants the federal government to stop its plan to annually increase a tax on the alcoholic drink. Beer Canada has launched a new campaign calling on Canadians to sign a petition asking Finance Minister Bill Morneau to axe the escalating beer tax. Source