Railroaders place to shoot the shit.

But the new management at Canada's largest railway say they have been heartened by sequential growth in their volumes in recent months, so much so, that they will implemented measures to improve shareholder value going forward, including boosting the dividend in 2010.

"We have turned a corner in the last part of that quarter in terms of year-over-year growth and that's continuing into January," said Claude Mongeau, the railway's recently appointed chief executive. "This positions us very, very well for 2010, if the economy stays on track."

Still, the railway reported adjusted net income for the quarter of $424-million, or 90¢ a diluted share, excluding a one-time real estate sale and a tax gain during the last three months of the year. That was down nearly 20 percent what it earned in the quarter last year, and below the Street's expectations of 91¢ a share, according to Bloomberg estimates.

The drop was largely attributed to the impact the stronger Canadian dollar had on the value of its U.S. shipments; the boost it got last year from the lag in its fuel surcharge; and a five-day strike in December. Collectively those negatively impacted earnings by 35¢ a share during the quarter compared to 2009.

CN's volumes, measured by carloads, were flat year-over-year. But they were up were up 4 percent compared to the third-quarter, which management said was an encouraging sign that the economy is improving.

Management said they are now aiming for "double-digit" earning per share growth and a "high single-digit" volume growth in 2010.

"This story is not really based on 2009 results, or particularly even 2010," said Brian Yarbrough, Edward Jones analyst. "The key is volumes are improving. Obviously, 2009 was anemic. But it is going to be a slow recovery."

While the company's fourth-quarter earnings came in below expectations yesterday, the company said it would increase its dividend by 7 percent this year, or to roughly 27¢ a share, and initiate a share buyback program of up to 15 million shares for cancellation in order to increase shareholder value.

But management warned that there are still headwinds ahead, with a strong Canadian dollar topping that list heading into 2010. Management also warned of higher depreciation and casualty costs in 2010, probably in the range of $100-million for the year combined.

A lot of eyes will be watching the transition of management at CN after the retirement of Hunter Harrison as chief executive at the end of the year.

Mr. Mongeau, who took over as chief executive on Jan. 1, appointed Keith Creel as chief operating officer and Jean-Jacques Ruest as chief marketing officer earlier this week. Those appointments follow Luc Jobin taking over as chief financial officer in mid-2009, replacing Mr. Mongeau in the role.

(The preceding article was published January 27, 2010, by the Financial Post.)