CN Nets $485 Million in Third Quarter

TORONTO - Oct 22/07 - SNS -- CN reported a net income of CDN $485 million on revenue of $2,023 million during the third quarter ending September 30.

In reporting the latest quarterly results, CN said revenue ton-miles, a measurement of the relative weight and distance of rail freight transported by the Company, declined 1% during third-quarter 2007 versus the comparable period of 2006. Total rail freight revenue per revenue ton-mile, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, declined one per cent over the same period in 2006.

Net income for the first nine months of 2007 was $1,325 million, compared to $1,588 million during the same nine month period last year.

Revenues for the first nine months of 2007 were relatively flat at $5,956 million, as freight rate increases and an overall improvement in traffic mix were largely offset by the impact of the first-quarter United Transportation Union (UTU) strike and adverse weather conditions, operational challenges, primarily in western Canada, the translation impact of a stronger Canadian dollar on U.S. dollar-denominated revenues, lower fuel surcharge revenues as a result of a decrease in the applicable year-over-year oil prices, and weakness in specific markets, particularly forest products.

Revenue ton-miles for the first nine months of 2007 declined 2% from the comparable period of 2006, while total rail freight revenue per ton-mile increased 2%.

In addition to the adverse weather conditions in the first quarter and operational challenges in the second quarter, the Company's results in the first nine months of 2007 included the impact of a first-quarter 2007 strike by 2,800 members of the UTU in Canada for which the Company estimates that the impact on first-quarter 2007 operating income and net income approximated $50 million and $35 million, respectively ($0.07 per diluted share).