Canadian National Railway Company (CNR) Q4 2024 earnings summary

Executive summary

• 2024 was marked by significant external disruptions, including labor disputes, port strikes, and severe winter weather, leading to lower-than-expected volumes and earnings, but operational resilience and rapid recovery were demonstrated.

• Volume growth was achieved despite a weaker macro environment, supported by CN-specific initiatives and record Canadian grain shipments.

• Labor stability has been achieved for 2025, with new agreements in place and arbitration processes on track.

• The Iowa Northern acquisition extends network reach and is expected to deliver operational and commercial synergies.

• Resource alignment positions the company for growth at low incremental cost in 2025.

Financial highlights

• Q4 2024 adjusted EPS was $1.82 (down 10% year-over-year), diluted EPS was down 45%; full-year adjusted EPS was $7.10 (down 2%).

• Q4 operating ratio was 62.6%, up 330 bps; full-year adjusted OR was 62.9%, up 210 bps.

• Q4 revenues declined 3% year-over-year to C$4,358 million; full-year revenue rose 1% to C$17,046 million.

• Free cash flow for 2024 was C$3,092 million, down from C$3,887 million in 2023.

• Over 13 million shares repurchased for $2.3 billion (C$2,651 million) in 2024; a new buyback program of up to 20 million shares approved for 2025-2026.

Outlook and guidance

• 2025 adjusted EPS growth expected in the 10%-15% range; reaffirmed high single-digit EPS CAGR for 2024-2026.

• RTM volume growth forecasted in the low to mid-single digits, with more than half from CN-specific initiatives and a third from recovery of lost volumes.

• CapEx guidance for 2025 is C$3.4 billion, focused on safety, efficiency, and growth.

• Guidance assumes modest North American industrial production growth (~1%), stable labor, and no recession from tariffs.

• Effective tax rate expected at 24%-25%; 5% dividend increase announced for 2025, marking 29 consecutive years of increases.