Canadian National Railway Company (CNR) Q1 2025 earnings summary

Executive summary

• Q1 2025 delivered 4% revenue growth to $4.4B and 8% diluted EPS growth to $1.85, with strong free cash flow and improved operating ratio, despite winter weather disruptions.

• Network resilience and operational efficiency enabled rapid recovery from severe winter conditions, maintaining high service levels.

• Labor agreements concluded in Canada and the U.S., including a three-year deal with 3% annual wage increases.

• Acquisition of Iowa Northern Railway Company completed, resulting in a $24 million remeasurement gain.

• Ongoing investments in capacity, especially at Prince Rupert, and new intermodal services to support future growth.

Financial highlights

• Q1 operating income rose 4% to $1.6B; net income up 5% to $1,161M; diluted EPS up 8% to $1.85.

• Operating ratio improved by 20 basis points to 63.4%.

• Free cash flow increased 18% to $626M, driven by higher operating income and lower capex.

• Labor costs flat year-over-year due to lower headcount offset by higher compensation; fuel expense down 5%.

• Other income rose over $20M due to Iowa Northern acquisition gain.

Outlook and guidance

• 2025 adjusted diluted EPS growth expected at 10–15%, with low to mid single-digit RTM growth.

• Capital investment plan set at $3.4B for 2025; 5% dividend growth planned.

• 2024–2026 outlook targets high single-digit adjusted EPS growth and pricing above rail inflation.

• Guidance assumes slightly positive North American industrial production, CAD 0.70, WTI at $60–$70/bbl, and tax rate at 24%–25%.

• Heightened risk of recession and tariff uncertainty could impact outlook.