Ms. Tracy Robinson reports

CN ANNOUNCES SECOND QUARTER RESULTS

Canadian National Railway Company has released its financial and operating results for the second quarter ended June 30, 2023. The company's focus on scheduled railroading has resulted in year-over-year improvements in car velocity, train speed and through dwell.

"CN's disciplined approach to scheduled railroading continues to deliver for our customers. As volumes evolve, we will continue to refine our plan to optimize efficiency and drive further improvements to customer service. Our goal to accelerate sustainable, profitable growth through 2026 and beyond remains on track," said Tracy Robinson, president and chief executive officer, CN.

Second quarter 2023 compared with second quarter 2022

Financial results highlights:

• Revenues of $4,057-million, a decrease of $287-million, or 7 per cent;
• Operating income of $1.6-billion, a decrease of $169-million, or 10 per cent;
• Operating ratio, defined as operating expenses as a percentage of revenues, of 60.6 per cent, an increase of 1.3 points, or an increase of 1.6 points on an adjusted basis;
• Diluted earnings per share of $1.76, a decrease of 8 per cent, or a decrease of 9 per cent, compared with second quarter 2022 adjusted EPS;
• Free cash flow for the second quarter of 2023 was $1.1-billion, an increase of $103-million, or 10 per cent;
• Free cash flow for the first half of 2023 was $1,693-million, an increase of $125-million, or 8 per cent.

Operating performance:

• Injury frequency rate of 1.00 (per 200,000 person hours), an improvement of 17 per cent, and accident rate of 1.91 (per million train miles), a deterioration of 5 per cent;
• Through dwell of 6.8 (entire railway and hours), an improvement of 6 per cent;
• Car velocity of 216 (car miles per day), an improvement of 3 per cent;
• Through network train speed of 19.9 (miles per hour), an improvement of 3 per cent;
• Fuel efficiency of 0.888 (U.S. gallon of locomotive fuel consumed per 1,000 gross ton miles), 6 per cent less efficient;
• Train length of 7,934 (feet), a decrease of 6 per cent;
• Revenue ton miles of 55,877 (million), a decrease of 8 per cent.

Updated 2023 financial outlook

In light of CN's second quarter results and revised expectation of weaker-than-anticipated volumes in the second half of 2023, CN is updating its full-year outlook and now expects flat to slightly negative year-over-year growth in adjusted diluted EPS in 2023 (compared with the April 24, 2023, expectation of growth in the mid-single digits). CN reiterates its longer-term financial perspective and continues to target compounded annual diluted EPS growth in the range of 10 per cent to 15 per cent over the 2024 to 2026 period driven by growing volumes more than the economy, pricing above rail inflation and incrementally improving efficiency, all of which assume a supportive economy.

Second quarter 2023 revenues, traffic volumes and expenses

Revenues for the second quarter of 2023 were $4,057-million compared with $4,344-million for the same period in 2022. The decrease of $287-million, or 7 per cent, was mainly due to lower volumes of intermodal, crude oil, U.S. grain exports and forest products, primarily as a result of lower demand for freight services to move consumer goods and customer outages caused by Canadian wildfires, lower ancillary services including container storage and lower fuel surcharge revenues as a result of lower fuel prices, partly offset by freight rate increases, the positive translation impact of a weaker Canadian dollar and higher export volumes of Canadian grain.

Operating expenses for the second quarter of 2023 were $2,457-million compared with $2,575-million for the same period in 2022. The decrease of $118-million, or 5 per cent, was mainly due to lower fuel prices, partly offset by higher labour and fringe benefit expense mainly driven by higher average head count, general wage increases and the negative translation impact of a weaker Canadian dollar.

About Canadian National Railway Company

CN is a world-class transportation leader and trade-enabler. Essential to the economy, to the customers and to the communities it serves, CN safely transports more than 300 million tons of natural resources, manufactured products and finished goods throughout North America every year. CN's network connects Canada's eastern and western coasts with the U.S. south through a 18,600-mile rail network, CN and its affiliates have been contributing to community prosperity and sustainable trade since 1919. CN is committed to programs supporting social responsibility and environmental stewardship.

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