CN profits surges $1.69 billion in Q3; CEO retiring

BUSINESS

CN profit surges to $1.69 billion in Q3 with KCS break fee; CEO retiring

Published Tuesday, October 19, 2021 5:15PM EDT Last Updated Tuesday, October 19, 2021 5:27PM EDT

CN Rail locomotives are moved on tracks past cargo containers sitting on idle train cars at port in Vancouver, on Friday, February 21, 2020. (THE CANADIAN PRESS/Darryl Dyck)

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MONTREAL -- Canadian National Railway Co.'s embattled CEO is retiring in the new year, the railway says as it reported earning $1.685 billion in the third quarter, thanks in part to a $770-million after-tax break fee it received after walking away from a takeover bid for Kansas City Southern railway.

The Montreal-based company says Jean-Jacques Ruest will leave at the end of January or when a successor has been appointed. Ruest has been a target for replacement by activist shareholder TCI Fund Management Ltd.

鈥淚 have been honuored to lead CN during my time as chief executive officer, and I am confident that the company is well-positioned to continue to thrive following my retirement,鈥� he said in a statement after markets closed.

鈥淭he strength of the company's management team and board allow me to announce my planned retirement knowing that the company we have built will continue to prosper.鈥�

Railway chairman Robert Pace said Ruest deferred his retirement due to the KCS transaction and introduction of its strategic plan.

CN says it earned $2.37 per diluted share for the three months ended Sept. 30, up from $1.38 per share or $985 million a year earlier.

Excluding one-time items such as the break fee, adjusted earnings increased 9.5 per cent to $1.08 billion or $1.52 per share, up from $985 million or $1.38 per share in the third quarter of 2020.

Revenues increased 5.3 per cent to $3.59 billion, up from $3.41 billion.

CN was expected to report $1.44 per diluted share in adjusted profits on $3.54 billion of revenues, according to financial data firm Refinitiv.

Ruest said the railway is 鈥渕aking progress on executing our strategic plan. This includes delivering immediate shareholder value while maintaining our long-term commitment to safety, customer service and sustainable value creation.鈥�

The results come a day after TCI made its case for replacing four directors and Ruest in a bid to improve the railway's financial performance. A special shareholder meeting is set for March.

This report by The Canadian Press was first published Oct. 19, 2021.