CN's third-quarter profit climbs 14%

Canadian National Railway's profit rose 14 per cent in the third quarter, despite the beginnings of an economic slowdown.

Canada's biggest railway earned $552 million, or $1.16 a share, for the three months ended Sept. 30, compared with $485 million, or 96 cents, in the same period last year.

In its statement, however, CN recognized that the current financial crisis will translate into poorer economic growth for its customers in the coming months.

Three month stock chart for Canadian National

"The uncertain economic landscape in North America and around the world will pose challenges to CN and its customers," said company president and chief executive officer Hunter Harrison. "But we believe CN is well positioned to weather the headwinds."

The Montreal-based firm realized a deferred income tax gain of nine cents a share for the period.

Quarterly revenue rose 12 per cent, reaching $2.257 billion compared to $2.023 billion for the same three months one year earlier.

The company said, however, that a large portion of its higher revenue was related to a fuel-related shipping surcharge.

Some other firms, mainly airlines, have dropped their own fuel surcharges recently in response to falling crude oil prices.

Freight cash up, volumes down

Looking at its freight metrics, CN saw revenue rise to $2.028 billion, up from $1.821 billion for the same time last year.

On a revenue ton mile basis — defined as one ton of revenue traffic transported one mile — CN, however, experienced a volume dip.

Change in freight traffic % Petroleum-chemicals -9 Metals 12 Forest -10 Automotive -21Source: Canadian National

The company had 45.4 billion revenue ton miles, down compared to 46.5 billion this time last year.

In most of its main freight categories, CN's traffic volume fell in the period compared to last year.

Tough opponent

CN said it is also continuing its action to acquire the Elgin, Joliet and Eastern Railway in Illinois which the company bought for $300 million.

The purchase of the railroad, however, has raised the ire of local residents who are opposing CN's plans to increase freight traffic in the suburb of Chicago.

In April, Democratic Senator and presidential candidate Barack Obama wrote a letter supporting the opposition to CN's takeover and asking the Canadian company for assurances that safety and the environment will be safeguarded.

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