Efficiency Focus Gives CN Cash to Grow

Article Excerpt

CANADIAN NATIONAL RAILWAY CO. $47 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) operates a 19,200-mile rail system in Canada and 16 Midwestern U.S. states. Goods shipped include oil, coal, grain, forest products and manufactured goods. This wide product base cuts CN’s reliance on any one commodity. CN’s revenue rose from $5.7 billion in 2001 to $6.1 billion in 2002, partly due to the acquisition of two American railways. Revenue fell to $5.9 billion in 2003, but more acquisitions pushed revenue up to $7.2 billion in 2005. Expanding through acquisition is always risky, but these new railways broadened CN’s geographic reach. Restructuring costs cut CN’s profits from $1.21 a share (total $727 million) in 2001 to $0.91 a share ($553 million) in 2002. But profits rose steadily to $2.77 a share ($1.6 billion) in 2005. Most efficient railway on the continent CN has done a good job in the past few years controlling its costs. Its operating ratio (regular…

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