CN Announces Solid Fourth Quarter and Year-End Results

Executive Summary

• CN reported fourth-quarter and full-year 2025 financial results, showing growth in revenues, operating income, and net income compared to the prior year.
• Diluted EPS grew 12% to C$2.03 in Q4 2025 and 8% to C$7.57 for the full year 2025.
• The company announced a 3% increase to its quarterly cash dividend for Q1 2026 and approved a new Normal Course Issuer Bid (NCIB) to repurchase up to 24 million shares.
• CN provided 2026 financial guidance, including a C$2.8 billion capital program and expectations for adjusted diluted EPS growth to slightly exceed flattish volume growth.

Key Details

• Q4 2025 Financials:
  • Revenues: C$4,464 million (up 2% YoY).
  • Operating Income: C$1,733 million (up 6% YoY); Adjusted Operating Income: C$1,782 million (up 9% YoY).
  • Net Income: C$1,248 million (up 9% YoY); Adjusted Net Income: C$1,284 million (up 12% YoY).
  • Diluted EPS: C$2.03 (up 12%); Adjusted Diluted EPS: C$2.08 (up 14%).
  • Operating Ratio: 61.2% (improved 1.4 points); Adjusted Operating Ratio: 60.1% (improved 2.5 points).
• Full-Year 2025 Financials:
  • Revenues: C$17,304 million (up 2% YoY).
  • Operating Income: C$6,587 million (up 5% YoY); Adjusted Operating Income: C$6,636 million (up 5% YoY).
  • Net Income: C$4,720 million (up 6% YoY); Adjusted Net Income: C$4,756 million (up 6% YoY).
  • Diluted EPS: C$7.57 (up 8%); Adjusted Diluted EPS: C$7.63 (up 7%).
  • Free Cash Flow: C$3,336 million (up 8% YoY).
  • Adjusted EBITDA: C$8,734 million (up 4% YoY).
  • Adjusted Debt-to-Adjusted EBITDA: 2.51 times.
  • Return on Invested Capital (ROIC): 12.9%; Adjusted ROIC: 13.0%.
• Shareholder Returns:
  • Repurchased approximately 15 million shares in 2025 for approximately C$2 billion.
  • Q4 2025 share repurchases: ~4.4 million shares for ~C$600 million.
  • Dividend increase: 3% increase to the quarterly cash dividend effective Q1 2026 (30th consecutive year of increases).
  • New NCIB: Approved to repurchase up to 24 million common shares between Feb 4, 2026, and Feb 3, 2027.
• 2026 Guidance & Outlook:
  • Capital Program: C$2.8 billion (net of customer reimbursements), a decrease of C$500 million from 2025.
  • Volume Assumption: RTM growth expected to be flattish.
  • EPS Expectation: Adjusted diluted EPS growth expected to slightly exceed volume growth.
  • Economic Assumptions: CAD/USD exchange rate assumed at $0.715; WTI crude oil price assumed at US$60–US$70 per barrel.
• Operational Performance (Q4 2025 vs Q4 2024):
  • Gross Ton Miles (GTMs): 118,923 million (up 5%).
  • Revenue Ton Miles (RTMs): 61,707 million (up 4%).
  • Through Dwell: 7.0 hours (down 1%).
  • Car Velocity: 215 car miles per day (up 2%).
  • Fuel Efficiency: 0.875 US gallons per 1,000 GTMs (1% more efficient).
  • Train Length: 7,868 feet (up 3%).
• Operational Performance (Full-Year 2025 vs Full-Year 2024):
  • GTMs: 463,002 million (up 1%).
  • RTMs: 238,159 million (up 1%).
  • Carloads: 5,458 thousand (up 1%).
  • Through Dwell: 7.1 hours (up 1%).
  • Car Velocity: 206 car miles per day (down 1%).
  • Fuel Efficiency: 0.873 US gallons per 1,000 GTMs (in line with prior year).
• Business Acquisition:
  • CN acquired Iowa Northern Railway Company (IANR), a Class III short-line railroad with ~175 route miles in northeast Iowa.
  • Control was assumed on March 1, 2025, following STB approval.
  • Total consideration was US$230 million (C$312 million).
  • Goodwill recognized: $31 million.

Notable Quotes

• "Our team delivered a strong fourth quarter and closed 2025 with disciplined execution and a relentless focus on capturing opportunities for our customers. I thank our railroaders for their commitment to running the railroad safely and efficiently. In a challenging demand environment, their focus on service, cost control and productivity drove solid performance." – Tracy Robinson, President and Chief Executive Officer, CN
• "As we enter 2026, we expect continued macroeconomic uncertainty and elevated geopolitical risk. We are managing through this environment by focusing on what we can control: disciplined capital allocation, rigorous cost management and strengthening free cash flow. This approach positions CN to respond quickly as volumes shift and to deliver sustainable long-term value for shareholders." – Tracy Robinson, President and Chief Executive Officer, CN