Financial performance rebounds as challenges shift
CN generated total revenue of just under 14.5 billion Canadian dollars in 2021 (around 11.4 billion U.S. dollars), a five percent increase compared to its 2020 results, which were impacted by the drop in demand due to the Covid-19 pandemic. However, the company’s revenue had not yet reached its pre-pandemic levels when it was at its highest. The company further reported about 8.9 billion Canadian dollars in operating expenses (some seven billion U.S. dollars). Despite revenues lower than 2019’s, Canadian National Railway’s operating ratio—at its highest in 2020—had reached 61.2 percent in 2021, lower than its 2019 performance. This suggests the company quickly rebounded from the pandemic and the 2020 Canadian pipeline and railway protests, which impacted its operations throughout Canada as it halted traffic along an important rail line between Toronto and Montreal.However, the railway operator’s strong 2021 financial performance came with rising average fuel costs. As the war in Ukraine has a ripple effect on the Western Canadian Select crude oil price, the company’s operating expenses could hike up further in 2022 due to fuel costs, despite CN reducing its diesel fuel consumption.
Stiff North American competition
The Canadian operator will also contend with the announced Canadian Pacific Railway and Kansas City Southern merger. Canadian Pacific is CN’s main competitor in its home market and would extend its operations to Mexico by buying KCS—a market outside of CN’s rail network.CN ranked among the five leading North American railroad companies based on operating revenue, behind U.S.-based BNSF, Union Pacific, and CSX, making it the leading Canadian rail freight company. In 2021, it dwarfed its main competitor Canadian Pacific Railway by over five billion U.S. dollars in revenue. Transporting close to 5,700 carloads across its network, CN was also the fifth leading North American company based on carloads transported across its network, with its U.S. competitors taking the lead. The company also employed just under 24,100 people for its operations, making it an essential employer in the Canadian railway industry.
