July 22, 2020
Christopher Reynolds THE CANADIAN PRESS
MONTREAL – Canadian National Railway Co. has laid off about 4,000 employees from its workforce this year as profits sagged 60 per cent in the second quarter amid fallout from the Covid-19 pandemic.
Shipments declined nearly across the board, prompting layoffs that left the country’s largest railroad operator down 5,100 employees from June 2019, when it had some 26,500 workers.
Roughly 3,000 of the 4,000 workers who were let go in 2020 are on furlough – meaning they can be recalled if business picks up – while some 1,000 others were permanently laid off, said CEO JJ Ruest.
“We unfortunately had to do quite a few layoffs. The good news is we’re starting to recall some people back to work,” Ruest said on a conference call with analysts on Tuesday.
The pandemic “adversely impacted” earnings, with revenue from auto and petroleum/chemicals shipments dropping 72 per cent and 25 per cent year-over-year, respectively, CN said.
Container shipments – CN’s most lucrative category at $874 million, accounting for close to one-third of freight revenue – declined by 12 per cent as consumer spending plummeted amid lockdowns and store closures.
The railway’s “trough” in May saw furlough numbers peak in lockstep with low points such as a 90 per cent plunge in auto revenue that month, Ruest said.
Cautious optimism remains, however. After taking 14,500 cars off the tracks between April and June, CN has started to bring some out of storage for auto and lumber traffic. With more cars come more recalled workers.
“We’re very methodical about bringing them back,” said chief operating officer Rob Reilly. “We’re still trying to figure out what the future volume’s going to be.”
Grain and fertilizer shipments held firm in the second quarter, helping to mitigate damage from other categories at the company.
CN set records for grain volume in four consecutive months this year. The planned acquisition of 1,500 high-capacity hopper cars aims to continue that trend, CN said.
Nonetheless, net income dropped to $545 million in the quarter ended June 30, compared with $1.36 billion a year earlier.
Revenue decreased by $750 million or 19 per cent year-over-year to $3.21 billion in the second quarter, the Montreal-based company said.
On an adjusted basis, diluted earnings per share fell 26 per cent to $1.28 from $1.73, matching analyst predictions, according to financial markets data firm Refinitiv.