CN announced the details of its strategic and financial value creation plan, “Full Speed Ahead – Redefining Railroading,” which will allow CN to continue delivering high-quality service to customers while generating profitable growth and enhanced returns to shareholders.

The Company’s focus will be on redefining railroading, driving profitable growth and making structural improvements for the next generation. CN has conducted an extensive review of all revenue and cost levers and has targeted C$700 million of operating income improvements to drive future growth. To achieve these improvements in 2022, CN intends to use a balanced approach that includes a strategic review of non-rail businesses and an optimization of labour productivity.

For 2022 CN expects to grow earnings per share by approximately 20 per cent and improve its operating ratio to 57 per cent. Additionally, CN is reviewing its capital structure and financial leverage with a view to increasing total shareholder distributions.

CN is committed to delivering value for its shareholders by:

  • Resuming share repurchases: CN will recommence share repurchases under the plan previously approved by CN’s Board of Directors in January 2021 and expects to complete the remaining C$1.1 billion of share repurchases by the end of January 2022.
  • Increasing shareholder returns: CN is reviewing capital structure and financial leverage with a view to increase total shareholder distributions, including share repurchases in the range of C$5 billion for 2022.
  • Reducing capital expenditures: CN expects to reduce capex to 17 per cent of revenue in 2022 as a result of the current good condition of its network and the Company’s continued absolute commitment to safety and customer service. CN expects to maintain capex at 17 per cent of revenue for 2023-24 unless there are significant market shifts.
  • Producing compelling financial returns: CN is committed to driving top-quartile Total Shareholder Return (TSR), leading the industry in organic revenue growth driven by CN’s intermodal business and showing continuous improvement on its operating margin.

Lowering its operating ratio: CN is targeting an operating ratio of 57 per cent for 2022 by prioritizing rail operations, and committing to pursuing strategic alternatives for adjacent non-rail businesses that are not best-in-class; and rationalizing its cost structure by streamlining management to improve labour productivity by accelerating speed and quality of decision making.

As part of its strategic and financial plan, CN is reaffirming its 2021 financial outlook targets of double-digit adjusted diluted EPS growth, capital investments of approximately C$3.0 billion and free cash flow in the range of C$3.0 to C$3.3 billion.

CN is committed to meeting meaningful targets in fuel and carbon efficiency, while maintaining its commitment to safety and corporate governance by, among other measures:

  • Setting a science-based target of 43 per cent carbon emission intensity reduction by 2030 based on 2019 levels;
  • Becoming the North American rail industry leader in fuel efficiency, consuming approximately 15 per cent less locomotive fuel per gross ton mile;
  • Introducing an annual advisory vote on CN’s climate change action plan; and
  • Setting a target of at least 50 per cent of non-management directors coming from diverse groups, including gender parity, by the end of 2022.