Canadian National reports higher earnings amid mixed freight performance

Canadian National Railway (CN) reported higher revenue and earnings for the third quarter of 2026, supported by increased freight revenue and stronger traffic in several commodity segments, although intermodal volumes declined and the company’s reported operating ratio deteriorated.

The Canadian railway operator recorded revenue of C$4.77 billion for the three months ended 30 September 2026, an increase of 15% from C$4.17 billion in the corresponding period of 2025. Operating income rose 8% to C$1.73 billion, while net income increased 6% to C$1.21 billion.

Diluted earnings per share reached C$2.00, compared with C$1.83 a year earlier. Adjusted diluted earnings per share, a non-GAAP measure, increased 18% to C$2.16, reflecting adjustments associated with asset impairments and advisory costs.

CN’s reported operating ratio increased to 63.7% from 61.4%, indicating a higher proportion of revenue absorbed by operating expenses. However, its adjusted operating ratio improved by 40 basis points to 61.0%.

The quarter included a C$118 million impairment related to discontinued development of certain dispatching and back-office information technology components, alongside C$14 million in advisory costs associated with regulatory proceedings concerning the potential Union Pacific–Norfolk Southern merger.

Intermodal volumes decline despite revenue growth

CN’s freight revenue increased 15% year on year to C$4.57 billion, with growth across most of its commodity categories.

Intermodal revenue rose 9% to C$1.07 billion, although the number of intermodal carloads decreased 6% to approximately 542,000. Revenue ton miles in the segment also declined 3%, while freight revenue per intermodal carload increased 16%.

Grain and fertiliser revenue rose 19% to C$923 million, supported by a 12% increase in revenue ton miles. Petroleum and chemicals revenue increased 17% to C$1 billion, while automotive revenue advanced 31% to C$284 million.

Across its network, CN reported a 4% increase in gross ton miles and revenue ton miles, while total carloads were broadly unchanged at approximately 1.36 million.

The railway also reported mixed operational indicators, with average through-network train speed decreasing 2% to 19.1 miles per hour and car velocity declining 2%. Fuel efficiency improved by 2% to 0.814 US gallons per 1,000 gross ton miles.

Cash flow improves as CN maintains full-year outlook

For the first nine months of 2026, CN generated free cash flow of C$2.92 billion, an increase of 25% from C$2.34 billion a year earlier.

The company reported net cash provided by operating activities of C$4.78 billion over the nine-month period, compared with C$4.82 billion in 2025, while net cash used in investing activities decreased.

CN also repurchased approximately 3.9 million shares for C$676 million during the third quarter.

Tracy Robinson, President and Chief Executive Officer of CN, attributed the company’s quarterly performance to operational execution, productivity improvements and financial discipline.

Looking ahead, CN continues to expect low single-digit growth in revenue ton miles for 2026. Its adjusted diluted earnings per share guidance remains in the mid-to-high single-digit growth range, with performance currently tracking towards the upper end of that range.

The company also maintains its planned capital investment programme of approximately C$2.8 billion for 2026, net of customer reimbursements.

CN’s outlook is based partly on expectations of above-average grain crops in Canada and the United States, although the company continues to identify macroeconomic volatility, geopolitical developments and international trade tensions as sources of uncertainty.