Canadian National Railway Company (CNR) CIBC Eastern Institutional Investor Conference summary

Volume and operational performance

• Volumes are up 4.5% quarter-to-date and 4% year-to-date, driven by a strong Canadian grain crop, with other sectors like energy, metals, and automotive also performing well.

• Excluding grain, volumes are up 1% both quarter-to-date and year-to-date, while lumber and international intermodal remain soft due to market conditions.

• Car velocity exceeds 200 car miles per day, indicating a fluid network; crew productivity is up 13% and locomotive utilization up 7% in the first half.

• Record fuel efficiency achieved, up 3% year-over-year.

Financial initiatives and capital allocation

• Fast Track Initiative delivered nearly CAD 100 million in savings in the first half, with ongoing efforts to optimize assets and facilities.

• Capital investment is on track at CAD 2.8 billion for the year, a significant reduction from 2025, supporting strong free cash flow.

• Opportunistic share buybacks continue, with management viewing shares as undervalued.

• The new Canadian Productivity Mega Deduction is expected to boost free cash flow by CAD 150 million in 2027 and over CAD 200 million in 2028, with no change to capital allocation priorities.

Fuel price and margin impacts

• Rising fuel prices have reduced expected EPS tailwinds from fuel surcharges to CAD 0.10 in Q3 and CAD 0.05–0.10 in Q4.

• Higher fuel costs are expected to negatively impact operating ratio by 50 basis points in Q3 and 150–200 basis points in Q4 if prices remain stable.