Rising efficiency cuts their cyclical risk

Article Excerpt

Canada’s top two railways continue to focus on cutting costs and streamlining their operations. That puts them in a better position to handle changing demand for the cyclical products they transport, such as coal, oil and grain. CANADIAN NATIONAL RAILWAY CO. $96 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 428.4 million; Market cap: $41.1 billion; Price-to-sales ratio: 4.0; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.cn.ca) earned $2.5 billion in 2012. That’s up 11.9% from $2.2 billion in 2011. The company spent $1.4 billion on share buybacks during the year. Because of fewer shares outstanding, earnings per share rose 15.9%, to $5.61 from $4.84. Revenue rose 9.9%, to $9.9 billion from $9.0 billion. The company continues to benefit from rising trade between North America and Asia. CN also raised its freight rates and fuel surcharges. CN’s operating costs rose 9% in 2012, mainly due to higher labour and fuel expenses. Even so, CN’s operating…

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