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Canadian Rail Firm Trims Costs, Boosts Shareholder Payouts
17 Nov
Summary
- Bernstein raises price target on Canadian National Railway
- Company plans to lower capital spending, cut management costs
- Aims to speed up share repurchases amid attractive valuation
In the third quarter of 2025, Canadian National Railway Company (CNI) faced some top-line pressure, but its operating expenses and adjusted operating ratio performance remained solid. The company's CEO, Tracy Robinson, acknowledged that the railroad had fallen short of volume forecasts over the past two years, but emphasized that CNI has consistently delivered strong operational results and maintained top-tier margins.
To further improve its financial position, CNI announced plans to lower capital spending from $3.35 billion in 2025 to $2.8 billion in 2026, bringing capex to the mid-teens as a percentage of sales and aligning the company more closely with its US peers. This reduction reflects the completion of large capacity expansion projects in Western Canada and locomotive upgrades, rather than a pullback in growth initiatives.
Additionally, CNI intends to cut management labor costs by $75 million and speed up share repurchases, citing attractive valuation levels. These strategic moves are expected to enhance the company's profitability and shareholder returns in the coming years.
