- CN’s (CNR) financials for the quarter ending June 30, 2020, have been dealt a blow after COVID-19 tipped the North American freight sector on its head
- The railway operator’s net income fell 60 per cent from C$1.36 billion in the second quarter of last year to $545 million in 2020
- Automotive revenue fell 72 per cent, while revenue from metals and minerals, and petroleum and chemicals fell 30 per cent and 25 per cent, respectively
- The company noted that a sustained decrease in demand for freight transport is likely to continue and that the long-term impacts of the pandemic remain unknown
- CN (CNR) is currently up 1.38 per cent and is trading at $130.46 per share at 10:48am EDT
CN’s (CNR) financials for the quarter ending June 30, have been dealt a blow after COVID-19 tipped the freight sector on its head.
The Montreal-based railway operator’s net income fell 60 per cent C$1.36 billion in the second quarter of last year to $545 million in 2020. Likewise, revenue fell 19 per cent from $3.99 billion last year to $3.2 billion.
The declines were largely attributable to lower volumes across the substantial majority of CN’s commodity groups, which was in turn driven by the COVID-19 outbreak and lower applicable fuel surcharge rates.
During the quarter, the biggest drop was seen in automotive revenue, which fell 72 per cent compared to last year. Revenue from metals and minerals was also down by 30 per cent, while petroleum and chemicals revenue fell 25 per cent.
However, this was partially offset by improved shipments of grain, higher volumes of coal exports via west coast ports, as well as freight rate increases.
JJ Ruest, President and CEO of CN, said the company was able to swiftly rightsize its resources and continue the provision of transportation services.
“I’m pleased to reaffirm our commitment in encouraging the economic recovery through our $2.9 billion capital investment plan for 2020 as well as our new investment announcement of the purchase of approximately 1,500 new, efficient, high-capacity, covered hopper cars to expand our grain export business for delivery starting in January of 2021.
“Our strategic long-term approach to investments, together with our continued focus on cost and deployment of innovative technology, as well as our commitment to enabling trade, position us to keep delivering long-term value to our stakeholders,” he added.
As for the rest of 2020, CN says that the fluidity of the pandemic has substantially increased uncertainty in its operating environment, and that sweeping layoffs by its customers, government mandated self-quarantines and closures for non-essential businesses have significantly curbed customer demand.
The company has chosen not to re-issue its 2020 guidance, which was withdrawn earlier in the year, and cautioned that investors should not rely on any previously announced forecasts.
CN (CNR) is currently up 1.38 per cent and is trading at $130.46 per share at 10:48am EDT.