Canadian National Railway Company (NYSE:CNI) FY Conference Transcript

Summary of Canadian National Railway Company (CNI) FY Conference Call Company Overview - Company: Canadian National Railway Company (NYSE:CNI) - Date of Conference: September 11, 2025 - Key Speakers: CEO Tracy Robinson, CFO Ghislain Houle Industry Insights - Macroeconomic Environment: The current macroeconomic environment is challenging, impacting trade flows and volumes, which are flat year-over-year as of the end of Q3 [5][10] - Volume Performance: The company expects to finish the year ahead of last year, with domestic intermodal volumes up 26% in the current quarter [7][10] - Bulk Business Strength: The bulk segment, particularly grain and fertilizer, is performing well, with strong grain crops expected in Canada and the U.S. [5][6] - Intermodal Challenges: The intermodal portfolio has faced challenges due to tariffs, but there was a strong performance in July-August at Canadian ports, achieving an annualized pace of 900,000 to 1 million TEUs [6][10] - Forest Products Market: The forest products business is struggling due to low lumber prices and tariffs, with no expected inflection in the near term [7][8][23] Financial Performance - Grain Crop Forecast: Canadian grain production is projected at 75 million metric tons, slightly above the three-year average of 73 million [17][21] - Lumber Prices: Lumber prices have dropped significantly from $1,600 per thousand board feet post-COVID to around $400-$450, causing financial strain on producers [27] - Operating Ratio (OR) Outlook: The company does not expect to achieve a 200 basis point improvement in OR due to a mix of lower volumes and challenges in the forest products sector [28][30] Strategic Initiatives - Agility in Operations: The company has focused on operational agility, allowing for quick adjustments in response to market conditions, including furloughing and recalling staff as needed [12][17][13] - Customer Relationships: Emphasis on strong customer service and collaboration to identify new market opportunities [14][35] - Technology Investments: Investments in technology focus on safety, operational efficiency, and automation, with significant improvements in safety metrics over the past decade [66][67] Future Outlook - Volatility Management: The company acknowledges the ongoing volatility in the market and plans to manage costs tightly while seeking growth opportunities [10][64] - Capital Expenditure (CapEx): CapEx is being strategically allocated based on maintenance needs and capacity expansion, with a focus on productivity improvements [72][74] - Merger Considerations: The company is closely monitoring proposed rail mergers in the U.S. and is prepared to respond to potential impacts on competition and service offerings [39][44][46] Key Takeaways - Market Challenges: The company is navigating a complex environment with mixed performance across different segments, particularly in bulk and forest products [5][10][23] - Operational Resilience: Strong operational practices and customer relationships are seen as critical to navigating current challenges and seizing future opportunities [10][14][35] - Long-term Strategy: The focus remains on maintaining a lean operation while adapting to market changes and ensuring service excellence for customers [79][80]