Year-end profits up for CN, CP despite lower grain handles

Both of Canada’s big two railways were able to improve their overall gross and net in 2021 over 2020 despite a yield-robbing drought and disastrous track and bridge washouts in southern British Columbia.

Canadian National Railway (CN) on Tuesday reported 2021 net income of $4.892 billion on $14.477 billion in gross revenue, up from $3.784 billion on $13.819 billion in 2020.

Canadian Pacific Railway (CP), meanwhile, on Thursday reported 2021 net income of $2.852 billion on $7.995 billion in revenue, up from $2.444 billion on $7.541 billion in 2020.

For both railways, however, grain handling was almost the only market segment to book a decline in gross revenue in 2021 compared to 2020.

For CN, the grain and fertilizers segment marked a five per cent year-over-year decline in 2021, both in carloads at 628,000 and in segment revenue at $2.475 billion. While CN’s forest products and automotive segments also saw fewer carloads, their year-over-year revenue improved.

At CP, the grain segment saw an 11 per cent decline in carloads in 2021 over 2020, at 426,200, and 2021 revenue of $1.684 billion, down eight per cent.

CP’s only other segment to book a year-over-year decline in carloads and revenue was potash — down seven and six per cent, respectively. Its separate fertilizers and sulphur segment saw carloads and revenue both up five per cent.

Western Canada’s drought in 2021 weighed heavily on several of the major crops handled by the railways. Reduced yields are estimated to have cut the region’s 2021 production of wheat, barley, canola, oats and pulses by between 30 and 45 per cent compared to 2020 levels.

Floods and mudslides in southern British Columbia in November then washed out several tracks and destroyed rail bridges, which cut both railways’ access to port terminals at Vancouver — although both companies were able to resume service quickly.

CN said its operating performance “improved across most measures in 2021 when compared to 2020, specifically through network train speed, through dwell and car velocity.”

Those improvements, the company said, helped overcome “negative impacts from the polar vortex in February, the forest fires in Western Canada over the summer and the washouts in British Columbia caused by severe rain and flooding, resulting in a network shutdown in the region for three weeks in the fourth quarter.”

CP CEO Keith Creel, in that company’s release, said it “relied on our strong operating model and commitment to controlling what we can control to safely deliver for customers and shareholders despite the unique challenges faced in the (fourth) quarter.”

Both railways were coming off record-level grain handles in 2020, offset by significant traffic declines in other market segments that year, such as petroleum, crude oil and coal. — Glacier FarmMedia Network