(Bloomberg) -- Canadian National Railway Co. will consider selling additional real estate to free up cash that can be plowed back into its network.
Properties in Montreal and Calgary are among the assets that Canadian National could divest in the coming months, interim Chief Executive Officer Jean-Jacques Ruest said Tuesday in an interview in Toronto. The company has already sold about C$150 million ($117 million) of “non-core” assets this month, Chief Financial Officer Ghislain Houle told analysts Monday.
Canada’s largest railroad raised its 2018 capital expenditure budget 6.3 percent Tuesday to a record C$3.4 billion in a bid to eliminate bottlenecks and accommodate rising demand for freight after service issues angered customers such as grain farmers. Investments will be concentrated on the western section of the company’s network -- from the British Columbia ports of Prince Rupert and Vancouver to Chicago -- where growth is strongest, Ruest said.
Canadian National is looking to sell “primarily real estate,” Ruest said Tuesday in an interview in Toronto after the company’s annual meeting. “They’re good real estate assets but they don’t generate revenue carloads, they don’t move freight. So we take that money, cash it out, and deploy it out west where we can move more trains.”
Ruest declined to specify which assets the company would consider selling, or say how much they could fetch.
The additional spending prompted Canadian National to lower its full-year profit target on Monday. Adjusted earnings this year will be C$5.10 to C$5.25 a share, the company said in a statement, 15 cents lower at both ends than the previous projection.
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