U.S.-Japan trade pact; Alphabet, Tesla to report - what’s moving markets
Investing.com -- Shares of Canadian National Railway (TSX:CNR) Co (NYSE:CNI) declined Tuesday in U.S. after-hours trading after the rail operator reported second-quarter results that matched earnings expectations but fell short on revenue, citing ongoing trade and tariff uncertainty as it lowered its 2025 outlook. The stock dropped 2.4%, reflecting investor reaction to both the top-line shortfall and management’s decision to pull its multi-year guidance.
Revenue for the quarter ended June 30 fell 1% year-over-year to C$4.27 billion, missing analyst estimates of C$4.33 billion. Earnings came in at C$1.87 per diluted share, in line with expectations, while operating income rose 5% to C$1.64 billion driven by cost discipline and improving efficiency.
The company’s operating ratio—operating expenses as a percentage of revenue, improved to 61.7% from 64.0% a year ago, indicating better productivity despite weaker freight volumes. Revenue ton miles, a key industry metric for volume, declined 1% to 59.2 billion, reflecting softness across several commodities categories.
Freight revenues declined year-over-year in six of seven segments, including petroleum and chemicals, metals and minerals, and intermodal shipments. Notably, grain and fertilizer shipments were a bright spot, rising 13% in revenue and 13% in ton miles on robust export demand and favorable weather.
Amid macroeconomic headwinds, CN cut its forecast for 2025 adjusted earnings-per-share growth to the mid to high single digits from its previous range of 10% to 15%. It also withdrew its 2024–2026 outlook, citing “persistent trade and tariff volatility in key economic sectors” and a “continued high level of macroeconomic uncertainty.”
“Our team’s ability to be nimble and our focus on tight cost control allowed us to adjust our operations and deliver strong results despite a challenging external environment,” said Tracy Robinson, President and CEO of CN. “We are working closely with customers, including those impacted by trade issues, to provide them with the services they need to win in their markets.”
Despite the cautious earnings guidance, the railway kept its capital outlay target unchanged at approximately C$3.4 billion in 2025, net of reimbursements. Priorities include investments in network fluidity and safety-related spending across CN’s Canadian and U.S. operations.
Operating efficiencies also contributed to improving margins. Train velocity, fuel efficiency, and car velocity all improved modestly year-over-year, with average train length holding steady at just over 8,000 feet.