(Reuters) - Canadian National Railway Co (TO:CNR) (N:CNI) beat analysts' estimates for first-quarter profit on Monday driven by crude-by-rail shipments and withdrew its full-year 2020 forecast following the COVID-19 pandemic.
Canadian railroad operators have been getting a boost from shipping oil for producers looking for alternatives to congested pipelines. Canadian National said in January it expected crude shipments to be a growth driver this year.
"Looking broadly at energy-related carloads, crude by rail was a significant growth driver, up 45% year-over-year for the quarter," Chief Executive Officer Jean-Jacques Ruest said on Monday.
Rail freight revenue rose marginally to C$3.42 billion in the reported quarter on higher petroleum and chemical shipments. Total carloads, the amount of freight loaded into cars during a specified period, fell 5.9%.
However, with global storage space filling up fast and oil demand slumping, railroads could stand to lose a key part of their business.
Smaller rival Canadian Pacific Railway Ltd (TO:CP) last week warned the pandemic would result in flat growth for the full-year and flagged rapidly slowing crude volumes.
CN Rail, Canada's largest railroad operator, expects the second quarter to be tough for its energy unit on lower demand for crude, frack sand and jet fuel.
Current-quarter volumes for the company's automotives unit will also be hit as North American assembly plants remain shut as the virus outbreak continues.
However, unlike many companies in North America, which have suspended dividend payouts to maintain liquidity during the pandemic, CN Rail said it plans to maintain its previously announced 2020 dividend increase of 7%.
Rail blockades hit CN Rail's capacity equivalent to 10,000 carloads, or 1 million tonnes of grain exports in February.
Protesters blocked rail lines and roads across Canada for weeks to show solidarity with an indigenous group in the Pacific province of British Columbia who were opposed to a pipeline being built across their land.
The company's operating ratio, a key metric for Wall Street, fell to 65.7% from 69.5%. A lower ratio signals improved profitability.
On an adjusted basis, the company earned C$1.22 per share, beating analysts' estimate of C$1.09, according to IBES data from Refinitiv.
Revenue was flat at C$3.55 billion.