UPDATE 2-CN Rail sticks with earnings forecast, despite tough market

(Adds comment from CEO and analyst)
TORONTO, July 20 (Reuters) - Canadian National Railway Co
CNR.TO reported stronger than expected second-quarter earnings
and said it continues to expect double-digit growth in earnings
per share for the full year on Monday, even as shipment volume
slipped.
Several analysts had expected Canada's biggest railway to
cut its full-year earnings forecast as weak coal and grain
volumes weighed on revenue. ID:nL2N0ZU0LQ
CN did scale back some forecasts, saying it is no longer
counting on growth in shipments of crude oil and frac sand,
previously forecast to increase by 40,000 carloads in 2015.
It said it now expects those volumes "generally comparable
with 2014" in the full year, where it had previously forecast 3
percent growth.
Chief Executive Claude Mongeau said CN has frozen hiring and
laid off about 600 workers. Most should be recalled by the
second quarter of next year, he said, as other workers retire or
leave.
"It was a bit of a tough environment from a growth
standpoint, but I'm really pleased overall, still, with our top
line performance," said Mongeau on a call with analysts and
investors
Edward Jones analyst Jeff Nelson said the earnings forecast
was the most important part of the results, but also said the
company's second quarter performance shows it can respond
quickly to changes in the economic environment.
"This is, no doubt, in our view a pretty impressive quarter,
especially when considering some of the issues that are facing
the Canadian economy right now," he said. "They've proven that
they can be nimble."
Second-quarter coal revenue plunged 26 percent from the
year-before quarter, but revenue from automotive shipments rose
17 percent, and intermodal revenue was up 2 percent. Overall,
carloads fell 3 percent.
Excluding a deferred tax expense, adjusted earnings rose 12
percent to C$1.15 a share. Analysts, on average, had expected
earnings of C$1.05 a share on revenue of C$3.17 billion,
according to Thomson Reuters I/B/E/S.
The railway's operating ratio, a key measure of efficiency,
improved to 56.4 percent from 59.6 percent a year earlier.
Net income rose to C$886 million ($682 million), or C$1.10 a
share, from C$847 million, or C$1.03 a share, a year earlier.
Revenue was little changed at C$3.13 billion, compared with
C$3.12 billion a year earlier.
($1=$1.30 Canadian)