Canadian National Railway Company (CNR) Q3 2025 earnings summary

Executive summary

• Achieved 6% EPS growth and improved operating ratio to 61.4% year-over-year, driven by disciplined service, cost control, and productivity gains, despite macroeconomic and tariff headwinds.

• Revenues rose 1% to $4.2 billion, with net income up 5% to $1,139 million and diluted EPS up 6% to $1.83 compared to Q3 2024.

• Free cash flow for the first nine months increased 14% to $2.34 billion, with operating cash flow up 3% year-over-year.

• Initiated a new operating plan focused on scheduled operations, efficiency, and customer service, with management changes including consolidation to a single COO structure and new CCO.

• Accelerated share buybacks in Q3, repurchasing nearly 8 million shares for about $1 billion, and increased quarterly dividend to $0.8875 per share.

Financial highlights

• Q3 revenues increased by 1% to $4.2 billion, with a 1% rise in RTMs and 5% higher carloads; diluted EPS grew 6% to $1.83.

• Operating income rose 6% to $1.6 billion, and the operating ratio improved by 170 bps to 61.4%.

• Free cash flow up 14% year-to-date, exceeding $2.3 billion through September.

• Labor expense up 2% due to incentive compensation and wage inflation, offset by 5% lower headcount; fuel expense down 20% due to tax elimination and efficiency gains.

• Share repurchases totaled nearly 8 million shares for over $1 billion in Q3.

Outlook and guidance

• Maintains 2025 guidance for mid- to high-single-digit adjusted diluted EPS growth, with 2026 CapEx set at $2.8 billion, down nearly $600 million from 2025.

• 2025 CapEx expected at $3.35 billion; free cash flow conversion expected to accelerate as capital spend is reduced.

• Expects 2025 RTM growth in the low single-digit range, with slightly positive North American industrial production and above-average grain crops.

• Outlook remains cautious due to weak North American industrial production, housing starts, and ongoing tariff impacts.