Canadian National Railway profits fell by 12 per cent in ‘tough’ second-quarter

Canadian National Railway Co.’s CNR-T -0.22%decrease profit fell by 12 per cent in the second quarter amid economic weakness that reduced demand for oil, grain exports and consumer products.

The wildfires in parts of Canada also affected shipments of goods, said Montreal-based CN, which reported a 7-per-cent drop in revenue to $4.1-billion after markets closed on Tuesday.

Profit for the three months ending on June 30 was $1.16-billion, or $1.76 a share, compared with $1.33-billion ($1.92) in the same quarter of 2022. Revenue tonne miles – the metric for revenue earned by transporting one tonne of freight per mile – fell by 8 per cent from a year ago, dragged down by an 11-per-cent drop in shipping containers, CN’s second-biggest segment.

“The second quarter was a tough one,” said Ed Harris, CN’s chief operating officer.

Tracy Robinson, CN’s chief executive officer, said Canada’s largest railway has seen its own operations and those of its customers affected by wildfires, the B.C. port strike, hot weather and the Nova Scotia flooding.

“We’re also seeing a little more weakness on the economic front,” Ms. Robinson said on a conference call with analysts.

Ms. Robinson said the 13-day B.C. port strike that began at the start of the third quarter had a major impact on the flow of goods, and CN is working to reconnect the supply chains by running extra trains, an effort that will take eight more weeks.

CN reduced its financial outlook for the year, as Ms. Robinson predicted the economic recovery would be pushed back into 2024. The drought in parts of Western Canada is expected to reduce the size of the grain harvest to about 60 million tonnes, from 74 million last year, a reduction that will be seen in shipment volumes next year.

CN, which employs 25,000 across its network in Canada and the United States – 2,000 more than last year – has imposed a hiring freeze amid the weaker demand. “We have stopped [hiring] in some areas,” Ms. Robinson said, and slowed down considerably in other areas.