CN’s (NYSE: CNI) net profit for the first quarter of 2021 fell 3.7% to CA$974 million, or $1.37 per diluted share, compared with CA$1.01 billion, or $1.42 per diluted share, in the first quarter of 2020. One Canadian dollar equals 81 cents in U.S. dollars.
First-quarter revenue was “in line” with a year ago, at CA$3.54 billion on record intermodal traffic and shipments of Canadian grain, offset by pandemic-induced lower volumes for other commodity groups. A stronger Canadian dollar, lower fuel surcharge rates and the polar vortex in February also impacted first-quarter revenue, CN said, although the polar vortex was “similar in magnitude” to the revenue impact stemming from last year’s protests that caused blockades.
First-quarter operating expenses fell 5% to CA$2.21 billion as CN recovered CA$137 million, or CA$102 million after tax, from an agreement in the second quarter of 2020 to sell noncore lines in Wisconsin, Michigan and Ontario.
Operating income rose 9% in the first quarter to CA$1.33 billion, while adjusted operating income fell 2% to CA$1.19 billion.
“Industry-outpacing growth in our intermodal business, as well as our strong financial performance, position CN to be the premier railway of the 21st century: an engine of North American economic growth and prosperity and both an operational and sustainability leader. Gains in safety, train length, car velocity, labor productivity, fuel efficiency and other key measures demonstrate our strong operational performance,” CN President and CEO JJ Ruest said.
Last Tuesday, CN made a surprise bid to acquire Kansas City Southern (KCS), offering a cash-and-stock transaction of $33.7 billion. The offer came less than a month after Canadian Pacific (NYSE: CP) and KCS (NYSE: KSU) informed the Surface Transportation Board (STB) how they plan to merge operations via a deal worth $29 billion.
“Our proposal to combine with Kansas City Southern will drive value to KCS and CN shareholders and significantly enhance customer choice and competition, while further reducing greenhouse gas emissions by converting truck to rail,” Ruest said. “We have a high degree of confidence in our business, our offer to KCS and our vision for the future. We could not have achieved these results without the extraordinary talent and dedication of our great team of railroaders, who have our respect and appreciation, as always.”