(Bloomberg) -- Canada’s largest rail company lowered its 2024 earnings forecast as some customers diverted their shipments because of the threat of a strike.
About 6,000 employees of Canadian National Railway Co. had voted in favor of job action in May, and reauthorized it again in June after their negotiations broke down, threatening to imperil supply chains across Canada.
As a result, some of its customers started to reduce their shipping volume through Canada to the US to avoid disruptions, Chief Executive Officer Tracy Robinson said Tuesday during a call with analysts. She expects the rerouting to continue “until the labor question has been resolved.”
The Montreal-based company now expects for earnings per share to grow at mid-to-high single digits, compared with its forecast of 10% in April.
The guidance reduction assumes no labor disruptions and no increases in traffic diversions from Canada, she said on the call.
The rerouting already weighed on its earnings in the second quarter. The company reported reported revenue of C$4.33 billion ($3.14 billion), missing the average analyst estimate. Adjusted earnings per share of C$1.84 also missed expectations.
Canadian National Railway shares have declined 0.7% so far this year through Tuesday’s close, while the S&P/TSX Composite Industrials Sector Index has gained 10%.
“This has been a challenging quarter for us, but we understand the issues and we’re on them,” Robinson said. “We’re working through the uncertainty on labor here in Canada, which we hope to resolve in the coming weeks.”
(Updates with details from analyst call throughout.)
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