MONTREAL — Canadian National (CN) is putting behind it a dispute that pitted it once morest its second-largest shareholder to start fresh under the leadership of Tracy Robinson, a senior executive at TC Energy. The Montreal carrier also announced that Jean Charest, the former premier of Quebec, will join its board of directors.
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Chairman of the Board Robert Pace made the announcement on Tuesday during a conference to discuss fourth quarter results. “Tracy has over 35 years of experience in operations management, strategy development and project execution, which she can leverage to drive the company’s growth and profitability,” said he told the financial analysts who attended the call.
Ms. Robinson will take office on February 28. She was Executive Vice President and President, Canadian Gas Pipelines at TC Energy. She was also the chair of Coastal GasLink, a gas pipeline project in British Columbia. Before making the leap into the energy sector, she worked for regarding thirty years for Canadian Pacific (CP).
French proficiency
The one who will direct the destiny of the Montreal rail carrier is committed to learning French. “I also want to emphasize that I respect and appreciate CN’s rich history in Montreal and Quebec, where the common and official language is French,” she said in a statement.
“I have already started taking French lessons to be able to take full advantage of the experience of living in Quebec and to be able to communicate with CN’s valued employees and customers all over the continent,” adds- she.
The mastery of French by the directors of Quebec companies has resurfaced in recent news. The presentation of a speech entirely in English by the CEO of Air Canada, Michael Rousseau, who said he did not see the point of learning the language, had raised a wave of indignation at the beginning of November.
The end of a conflict
CN also announced the end of the conflict between it and TCI Fund Management, an activist shareholder who owns 5.2% of the outstanding shares of the Montreal carrier. The two parties have agreed to appoint two future independent directors to the board by the next annual general meeting.
Last October, the Montreal company had indicated that Jean-Jacques Ruest would retire at the end of January, or when a replacement would be found for him. He will leave his position at the end of February, finally, but will remain as an adviser until March 31.
In conflict with CN since last spring, TCI Fund Management had demanded that Mr. Ruest be replaced. The London firm had identified Jim Vena, an industry veteran, to succeed him.
At the end of December, Mr. Vena, however, withdrew from the process. The fund then accused CN’s board of directors of having let the ideal candidate slip through its fingers.
The tone has now changed between the two parties. TCI withdrew its request to call a special meeting of shareholders, which was scheduled to take place in March. “We are pleased to reach an agreement that will strengthen CN’s board by adding two highly qualified new directors,” said Chris Hohn, founder and portfolio manager of TCI, in a statement. TCI looks forward to the constructive interaction it will have with CN in the future.”
The results
In the fourth quarter, CN announced a net profit up 17.4%, while the company says it has increased the efficiency of its operations.
Net profit reached $1.2 billion compared to $1.02 billion for the same period last year. Operating revenue, for its part, increased by 3%, or $97 million, to reach $3.75 billion.
Adjusted net earnings per share reached $1.71, compared to $1.43 for the same period last year. Prior to the earnings release, analysts on average had expected earnings per share of $1.53, according to data from the firm Refinitiv.
The Montreal rail carrier also indicated that its operating ratio, which represents operating expenses as a percentage of operating revenues, reached 58.3%. This is an improvement of 3.1 percentage points.
The company has released its guidance for 2022. Management expects adjusted earnings per share to increase by approximately 20% in 2022. It plans to invest approximately 17% of its revenue in its capital expenditure program. It expects its free cash flow to reach $4 billion this year, up from $3.3 billion in 2021.
The Board of Directors approved a 19% increase in CN’s quarterly dividend. The directors also supported a share buyback program to cancel the equivalent of 6.8% of outstanding securities, representing a $5 billion transaction.
Company in this story: (TSX:CNR)
Stephane Rolland, The Canadian Press
