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CN Rail profit leaps on economic recovery

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Canadian National Railway Co. (CNR-T) reported a 21 percent jump in quarterly profit Tuesday on the back of higher freight volumes as the economy picked up steam in North America as well as globally.

 

CN, Canada's biggest railway, said net income rose to $556 million, or $1.19 a diluted share, in the three months to the end of September, from $461 million, or 97 cents a share, in the same period a year earlier.

 

Third-quarter revenue was $2.1 billion, up 15 percent, helped by higher freight rates and a higher fuel surcharge, in addition to stronger rail volumes.

 

Industry analysts, on average, had expected earnings of $1.13 an adjusted share, according to Thomson Reuters. The average revenue forecast was $2.1 billion.

 

The railway, which has lines across Canada and into the United States, said its operating ratio improved by 2 points to 60.7 percent.

 

CN kept unchanged the 2010 full-year earnings forecast it provided in July. Last quarter, CN raised its earnings outlook for this year, saying it expects adjusted earnings per share will be 25 percent above the $3.24 it reported for 2009.

 

The increase in CN's earnings was "more than an economic recovery story," said Claude Mongeau, CN's president and chief executive.

 

"We are starting to see dividends from our new supply chain initiatives, which are designed to help our customers grow their business and position CN to handle a greater amount of that traffic," Mongeau said in a statement.

 

CN has signed a number of collaboration agreements this year with Canada's major ports, as well as pacts with terminal operators to improve service levels.

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