'CN's ambition is to build the premier railway of the 21st century by methodically investing in technologies to deliver high-quality service to customers, improve safety and sustainability, create capacity and reduce costs and delays. Just as CN pioneered the industry's focus on efficiency to increase reliability, we are now well-positioned to lead the industry through its next transformation by investing in the success of our customers, workforce and communities while delivering enhanced financial results.'
JJ Ruest, President and Chief Executive Officer of CN
'We spent the last several years making strategic and important customer-centric investments in our network, technology, sustainability and people. These investments have allowed us to deliver high-quality service to our customers and position us well to drive more sustainable returns to shareholders over the long-term. I am confident that CN's senior management, a team of world-class railroaders who are focused on redefining the rail industry, have the skills and determination to lead the Company into this exciting next phase.'
CN is a unique franchise with 19,500 miles of railroad network connecting
CN has outlined a plan that is both ambitious and achievable. The Company's focus will be on redefining railroading, driving profitable growth and making structural improvements for the next generation. CN has conducted an extensive review of all revenue and cost levers and has targeted
For 2022 CN expects to grow operating income and earnings per share (EPS) by approximately 20% and improve its operating ratio to 57%. Additionally, CN is reviewing its capital structure and financial leverage with a view to increasing total shareholder distributions.
CN is committed to operational excellence and delivering value for its shareholders by:
Resuming share repurchases: CN will recommence share repurchases under the plan previously approved by CN's Board of Directors in
Increasing shareholder returns: CN is reviewing capital structure and financial leverage with a view to increase total shareholder distributions, including share repurchases in the range of
Reducing capital expenditures: CN expects to reduce capex to 17% of revenue in 2022 as a result of the current good condition of its network and the Company's continued absolute commitment to safety and customer service. CN expects to maintain capex at 17% of revenue for 2023-24 unless there are significant market shifts.
Producing compelling financial returns: CN is committed to driving top-quartile Total Shareholder Return (TSR), leading the industry in organic revenue growth driven by CN's intermodal business and showing continuous improvement on its operating margin.
Lowering its operating ratio: CN is targeting an operating ratio of 57% for 2022 by:
Prioritizing rail operations, including car velocity, train speed and train length, and committing to pursuing strategic alternatives for adjacent non-rail businesses that are not best-in-class; and
Rationalizing its cost structure by streamlining management, especially support functions, to improve labor productivity by accelerating speed and quality of decision making.
CN believes an operating ratio of 57% is optimal for a world in which customers and regulators are putting a greater emphasis than ever on expanding customer choice, service and reliability.
As part of its strategic and financial plan, CN is reaffirming its 2021 financial outlook targets of double-digit adjusted diluted EPS growth versus 2020 adjusted diluted EPS of
Focused on Leading the Industry with ESG Commitments
CN has a high-quality, experienced management team with a proven track record of executing on a forward-looking strategy as part of a sustainable future. CN continues to be the industry leader in fuel and carbon efficiency, with an uncompromising commitment to safety while also enhancing its top tier corporate governance profile. Key progress made on our plan to Deliver Responsibly includes: Setting a science-based target of 43% carbon emission intensity reduction by 2030 based on 2019 levels; Becoming the North American rail industry leader in fuel efficiency, consuming approximately 15% less locomotive fuel per gross ton mile; Introducing an annual advisory vote on CN's climate change action plan; Aligning executive compensation with ESG objectives, including safety and fuel efficiency; Reducing the mandatory retirement age and confirmed term limits for the Board of Directors; Adding two new directors in 2021, along with a
Commitment to
Despite the recently terminated transaction, CN's bid for
CN will continue to engage with market participants, railroads and shippers to ensure that all regulatory rules are enforced fairly, and customers do not suffer anti-competitive effects arising from a combination between Canadian Pacific and KCS.
Conference Call and Additional Information
CN will host a conference call today at
Parties wishing to participate via telephone may dial 1-866-324-3683 (
CN will webcast the presentation live and furnish slides supporting the remarks via the Investors section of its website at www.CN.ca/en/investors. A webcast replay will be available after the call ends.
About CN
CN is a world-class transportation leader and trade-enabler. Essential to the economy, to the customers, and to the communities it serves, CN safely transports more than 300 million tons of natural resources, manufactured products, and finished goods throughout
(1) Forward-Looking Statements
Certain statements included in this news release constitute 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws, including statements based on management's assessment and assumptions and publicly available information with respect to CN. By their nature, forward-looking statements involve risks, uncertainties and assumptions. CN cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Forward-looking statements may be identified by the use of terminology such as 'believes,' 'expects,' 'anticipates,' 'assumes,' 'outlook,' 'plans,' 'targets,' or other similar words.
Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors which may cause actual results, performance or achievements of CN to be materially different from the outlook or any future results, performance or achievements implied by such statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements. Important risk factors that could affect the forward-looking statements in this news release include, but are not limited to: the duration and effects of the COVID-19 pandemic, general economic and business conditions, particularly in the context of the COVID-19 pandemic; industry competition; inflation, currency and interest rate fluctuations; changes in fuel prices; legislative and/or regulatory developments; compliance with environmental laws and regulations; actions by regulators; increases in maintenance and operating costs; security threats; reliance on technology and related cybersecurity risk; trade restrictions or other changes to international trade arrangements; transportation of hazardous materials; various events which could disrupt operations, including illegal blockades of rail networks, and natural events such as severe weather, droughts, fires, floods and earthquakes; climate change; labor negotiations and disruptions; environmental claims; uncertainties of investigations, proceedings or other types of claims and litigation; risks and liabilities arising from derailments; timing and completion of capital programs; and other risks detailed from time to time in reports filed by CN with securities regulators in
Forward-looking statements reflect information as of the date on which they are made. CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement.
Contact:
CN Media Relations & Public Affairs
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Investment Community
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Investor Relations
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E: investor.relations@cn.ca
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