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CN Rail nearly doubles revenue in Q2 2021 as COVID-19 recovery builds

While CN and CP battle for KCS, a pair of heritage painted Canadian Pacific Railway locomotives work a yard with a vintage non PTC compliant stop signal near Alliston Ont., June 26, 2021. THE CANADIAN PRESS IMAGES/Stephen C. Host

Canadian National Railway Co. nearly doubled earnings and revenues in its second quarter as the company began to recover from the COVID-19 pandemic.

The Montreal-based railway earned $1.03 billion or $1.46 per share, up from $545 million or $0.77 per share in the first quarter of 2021. Excluding one-time items, adjusted profits were $1.06 billion or $1.49 per share, compared with $988 million or $1.28 per share in the first quarter.

Revenue for the three months ended June 30 was $3.60 billion, up from $3.21 billion the previous quarter.

The company also declared a dividend for its third quarter, of 61.5 cents per share to be paid in September.

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In 2020, CN was forced to build longer and heavier trains due to the sharp retreat in rail volumes and customer demand during the COVID-19 pandemic. The company said Tuesday that as the economy rebounds, it has been able to revert to its standard operating plan and improve train speeds.

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At the end of June, CN lost a critical bridge on its route to Vancouver due to wildfire in the area of Lytton, B.C. The railway was able to restore service last week after a two-week outage, but chief operating officer Rob Reilly said Tuesday it will be a few weeks more before CN fully recovers from the resulting backlog in traffic.

Click to play video: 'Rail restrictions implemented by Ottawa amid B.C. wildfires'
Rail restrictions implemented by Ottawa amid B.C. wildfires

“That’s a segment of railroad that averages about 25 trains a day,” Reilly told analysts in a conference call. “We’ve opened it up, but I would also say it’s a very active situation in British Columbia with the fires. So there are stops and starts out there.”

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The financial results come as the railway is awaiting a ruling from the U.S. Surface Transportation Board on its application for a voting trust for Kansas City Southern while its $33.6-billion takeover bid is analyzed by the regulator.

CN could be on the hook to pay the U.S. railway a US$1 billion penalty if the voting trust isn’t approved. That’s in addition to US$700 million it has agreed to pay KCS after it backed away from an agreement to be purchased by Calgary-based Canadian Pacific Railway Ltd.

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