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CN reports Q4-2008 net income of C$573 million

02/06/2009 AT 08:16

Net income for the fourth quarter of 2008 was C$573 million, or C$1.21 per diluted share, including a deferred income tax recovery of C$42 million (C$0.09 per diluted share) resulting from the resolution of various income tax matters and adjustments related to tax filings of prior years. Excluding this item, adjusted fourth-quarter 2008 net income was C$531 million, or C$1.12 per diluted share.(1)

Net income for the comparable quarter of 2007 was C$833 million, or C$1.68 per diluted share, including a net deferred income tax recovery of C$284 million (C$0.57 per diluted share) resulting from the enactment of corporate income tax rate changes in Canada, and after-tax gains of C$64 million (C$0.13 per diluted share) on the sale of CN's Central Station Complex (CSC) in Montreal and C$41 million (C$0.08 per diluted share) on the sale of the Company's investment in English Welsh and Scottish Railway (EWS). Excluding these items, CN's adjusted fourth-quarter 2007 net income was C$444 million, or C$0.90 per diluted share.

E. Hunter Harrison, president and chief executive officer, said: “CN turned in a solid fourth-quarter 2008 performance despite significantly lower volumes. Two factors acted as shock absorbers, offsetting the impact of the weaker volumes on our results. One was the decline in the value of the Canadian dollar versus the American dollar, which had a net positive translation impact on the conversion of U.S. dollar-denominated revenues and expenses into Canadian dollars. The second was the two-month lag in CN's fuel surcharge catching up to lower fuel prices.”

“The North American economy is in recession, and we do not know how long or deep it will be,” said Harrison. “And, although overall freight demand is much weaker, the basic driver of our business – demand for reliable, efficient, cost-effective transportation – remains intact. To meet our long-term objectives, we will continue to maintain pricing discipline and pursue opportunities that extend beyond business-cycle considerations.

“At the same time we will continue to do what's necessary to manage our assets and costs effectively in response to lower traffic volumes. CN, as one of the rail industry's most efficient operators, is well positioned to face the challenges of the current economic environment, and we are committed to making additional productivity improvements.”

Harrison added: “CN has a very resilient business model and a highly talented and dedicated team of railroaders, as demonstrated by our 2008 results. Looking ahead, 2009 will present even greater challenges, but we expect to continue to deliver value to our customers and shareholders.”

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