Its revenue and profit for the first quarter slightly missed estimates as the pandemic weighed down freight volumes of coal, petroleum and chemicals.
Low demand for consumer products, industrial goods and weak crude shipments hurt railroad operators last year, but vaccination programs and fiscal stimulus have fueled expectations of a recovery.
"We are encouraged about the economic recovery and the vaccine rollout, which is giving us strong confidence for the balance of the year," Chief Financial Officer Ghislain Houle said on a post-earnings call.
Canadian National now expects double-digit adjusted EPS growth for 2021 and high single-digit volume growth. The company had previously forecast high single-digit EPS growth and volume growth in mid-single digits.
Carload segments such as chemicals, forest products, metals, fuels and plastic are also expected to grow as industrial production picks up.
The results come as Canadian National and smaller rival Canadian Pacific race to take over U.S. railroad Kansas City Southern, eyeing control over a vast network of railways across North America.
Canadian National said a deal between it and Kansas City would enhance choices for shippers and customers.
North America's freight rail customers, from grain shippers to logistics companies, are pushing for Canadian Pacific to win the bidding war, eyeing stronger competition and swifter service.
Canadian National's operating ratio, a closely watched measure of operating expenses as a percentage of revenue, improved to 62.5% from 65.7%. A lower operating ratio signals improved profitability.
On an adjusted basis, Canadian National earned C$1.23 per share, missing analysts' average estimate of C$1.24, according to IBES data from Refinitiv.
Revenue of C$3.54 billion came below Wall Street's estimate of $3.58 billion.
(Reporting by Shreyasee Raj in Bengaluru; Editing by Devika Syamnath)
By Shreyasee Raj
