A CN Rail engine hauls a line of auto transport cars through Dartmouth, Nova Scotia. (THE CANADIAN PRESS/Andrew Vaughan)
Canadian National Railway Co. (CN Rail) is taking a cautious step back from its earlier financial promises due to increasing trade instability and tariff changes. While the company did report a modest profit rise in its second quarter, the uncertain trade environment forced a rethink of its broader outlook.
On Tuesday, the Montreal-based railway giant shared that it will no longer stand by its previous financial targets for 2024 to 2026. The shifting global trade climate, driven by inconsistent tariffs and disrupted supply chains, has made reliable forecasting nearly impossible, CN said in a statement.
Tracy Robinson, the company’s president and CEO, emphasized their focus on adaptability. "We’re clearly operating in uncertain times. While we can't control where trade policies go, we’re zeroing in on what we can do — strengthening customer relationships and managing costs smartly," she said during a conference call with analysts.
Customers Rethink Supply Chains
Janet Drysdale, CN’s interim chief commercial officer, pointed out that customers are re-evaluating how they move their goods. “The stop-start nature of tariffs has made businesses second-guess their logistics strategies,” she said.
Because of this disruption, CN has lowered its expectations for cargo volumes in the remaining months of the year. Specifically, the company now anticipates only slight growth in revenue ton miles (RTM) — a crucial measure that calculates how many tons of freight are transported over a mile.
In the second quarter, RTMs slipped by 1% compared to the same period last year. This decline reflects the shifting trade landscape and its ripple effect on the freight industry.
Earnings Forecast Scaled Back
As a result of these volume reductions and a stronger Canadian dollar, CN revised its forecast for earnings growth in 2025. Previously, the company projected adjusted diluted earnings per share to rise between 10% and 15%. Now, they expect growth in the mid to high single-digit range instead.
Ghislain Houle, CN’s chief financial officer, explained the reasoning behind the revision. “We’ve adjusted our outlook based on lower volumes and a stronger Canadian currency. These changes mean we’re now aiming for more modest earnings growth in 2025,” he said.
He also hinted at a slight pullback in capital expenditures for the year. “We’re staying close to our customers and making sure every dollar we spend is worth it,” Houle added.
Second Quarter Snapshot
Despite the economic turbulence, CN managed to slightly increase its net income to $1.17 billion for the quarter. However, total revenue fell 1%, down to $4.27 billion from $4.33 billion the year before.
Diluted earnings per share rose to $1.87, compared to $1.75 in the same period last year. The company also announced a third-quarter dividend of 88.75 cents per common share, set to be paid out on September 29.
These adjustments come months after CN reaffirmed its 2025 financial outlook in May, even as many competitors, like Canadian Pacific Kansas City Ltd., lowered their forecasts.
