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Did Canadian National Railway Beat Analyst Revenue Estimates in 4Q17?

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Jan. 25 2018, Updated 4:45 p.m. ET

Canadian National Railway’s 4Q17 revenue

In 4Q17, Canadian National Railway (CNI) posted revenue of 3.28 billion Canadian dollars compared with 3.21 billion Canadian dollars in the corresponding quarter of 2016, which represents a rise of 2.1% on a year-over-year basis. Canada’s largest freight rail was able to surpass analyst revenue estimates slightly by 0.5% in 4Q17.

CNI’s revenue rise in 4Q17 was attributable to increased international container traffic through the ports of Prince Rupert and Vancouver. In addition, higher volumes of fractionating sand, increased freight rates, and higher fuel surcharge revenues drove the revenue growth. However, this rise was offset by the unfavorable exchange impact from the strength in the Canadian dollar, reduced export shipments of US soybeans, and lower crude-by-rail shipments.

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Carloads in 4Q17

In 4Q17, Canadian National Railway witnessed a 7% jump in total shipments/carloads. The carloads in that quarter were 1.5 million compared with 1.4 million in 4Q16. RTMs (revenue ton miles) were up 1%, while rail freight revenue per RTM was up by an equal percentage. The company’s total freight revenue per carload, however, declined 4% in the reported quarter. Thus, CNI wasn’t able to post pricing gains in the fourth quarter of 2017. Meanwhile, while CNI’s carloads grew by 7% in 4Q17, rival Canadian Pacific Railway (CP) registered a 5% rise in volumes in the same quarter.

Peer group revenue growth in 4Q17

4Q17 was a mixed bag for the US Class I railroads’ (XTN) volumes. The major factor affecting volumes was the low-single-digit rise in carloads. Eastern US major railroad CSX (CSX) reported a 6% loss in revenue in that quarter due to an 8% decline in carloads. Canadian Pacific Railway’s (CP) revenue jumped 4% to $1.7 billion driven by a 5% rise in volumes. The smallest Class I railroad, Kansas City Southern (KSU), reported a 10% jump in revenue to $660.4 million driven by a 5% rise in carloads.

The intermodal segment remains the largest revenue source for Canadian National Railway. In the next part, we’ll dive into the company’s intermodal segment performance in 4Q17.

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