Canadian National Railway Company (CNR) investor relations material

Strategic growth opportunities

• Network expansion into Mexico via Union Pacific and FXE offers a transformative, long-term growth avenue, leveraging a CAD 45 billion Canada-Mexico trade corridor.

• Energy and agriculture remain strong growth pillars, supported by customer investments and diversified commodity flows, largely insulated from North American macroeconomic cycles.

• Automotive, metals, and domestic intermodal segments are seeing targeted growth through direct customer engagement and operational initiatives.

• The Mexico agreement is expected to deliver immediate, medium, and long-term volume benefits, including truck-to-rail conversion opportunities.

• Trade policy shifts and global demand are driving diversification and resilience in growth, with optimism for continued investment across sectors.

Operational execution and productivity

• Disciplined execution through scheduled railroading and initiatives like Fast Track have improved network fluidity, asset utilization, and workforce productivity.

• Capital investments have shifted from heavy expansion to a normalized spend of 15–17% of revenues, focusing on filling existing capacity.

• Record fuel efficiency and productivity gains are being achieved, with 5% workforce and 13% train crew productivity improvements.

• Cost savings from Fast Track are ongoing, with multi-year opportunities identified in yards, terminals, facilities, and support functions.

• Free cash flow is increasing, with excess cash being returned to shareholders and leverage rising modestly from 2.5x to 2.7x.

Market dynamics and pricing

• Growth is driven by both structural, idiosyncratic factors and macroeconomic trends, with energy and agriculture less tied to the macro environment.

• The company is leveraging pricing power by maximizing value for capacity, aiming for profitable growth above rail cost inflation.

• Fuel price volatility impacts earnings and operating ratio, but fuel surcharges and operational efficiency help mitigate effects.

• Diversification across commodities and geographies provides resilience against market fluctuations and trade uncertainties.

• The Mexico truck market presents a significant opportunity for rail conversion, especially as trucking economics become more challenging.