Canadian National Railway (CNR) has been a stalwart of railroading excellence for more than a decade. So it was unexpected to observe the congestion, service, and cost challenges CNR suffered in late 2017 and early 2018. In last year's first quarter, expenses grew 9% on flat revenue and the rail changed CEO. Now, under new CEO JJ Ruest, mismanagement of capacity and demand seem behind CNR , and it is increasing investment in 2019 to boost capacity more via 80 miles of new double track and 140 reliable new locomotives.
In its fourth quarter, the rail grew revenue ton miles 12%, expanded sales 16%, and improved its operating ratio 80 basis points to 61.9%. Excluding a charge to reduce its non-union labor force, the OR was 61.2%; we expect CNR will generally fare in the 50s. We maintain our wide moat rating and expect any change to our fair value estimate will be modestly upward as we incorporate actual performance and news of new growth opportunities and capital deployment plans. For the full-year 2018, CNRrealized broad strength in demand and solid rate increases, with coal revenue up 24% on export strength, petroleum and chemicals up 20%, metals and minerals up 11%, and intermodal up 8%.
Management expects in 2019 high-single-digit growth in revenue ton miles and pricing above inflation, resulting in double-digit growth of normalized EPS over the 2018 adjusted EPS of $5.50. The 2019 capital expenditure budget is $3.9 billion, up from $3.5 billion in 2018. Both are big investment years. Typically, $1.6 billion is basic maintenance spending, but the firm is adding 140 locomotives. We might have concern about increasing capital expenditures at other firms, but believe CNR is prudently adding capacity to avoid recurrence of year-ago congestion, and returning expensive leased motive power makes sense. We note the Canadian pension accounting reclassification has a 200-220 basis point negative impact on OR compared with prior years, but management guides to a high 50s OR over the long run.
