Increased pipeline capacity takes a toll on crude-by-rail
Following in the footsteps of CP Rail last week, Canadian National Railway reported weaker than expected first quarter results for 2016. Revenues declined 4% from the same time last year, falling to $2.964 billion. However, thanks to a 19% drop in operating costs, net income rose 13% to $792 million in Q1.
Revenue from petroleum products and carloads was down 16% in Q1, driven partly by a 7% decline in volumes. The decrease was blamed on increased pipeline capacity which reduced the amount of crude shipped by rail. CN also reported a drop in shipments of energy-related commodities such as frac sand, drilling pipe and semi-finished steel. On the bright side, shipments of refined petroleum products including propane, lubricants and alternative fuels saw positive gains in Q1. Revenues were down for all segments of CN's business with the exception of forestry and automotive.
About 20% of CN's revenues come from petroleum and chemical products. Last week, CP Rail reported a 28% decline in crude-by-rail revenues.
CN reduced their headcount by 10% over the past year, now employing just under 22,700 people. CN stock pays a dividend of $1 a share.
All figures reported are in Canadian dollars.