(Reuters) - Railroad operator Canadian Pacific Railway Ltd CP.TOCP.N on Tuesday reported a better-than-expected quarterly profit on higher shipments of crude oil, coal and potash and raised its full-year profit forecast.
CP’s U.S.-listed shares were up nearly 2 percent at $170.01 in extended trading.
The company now expects 2017 adjusted earnings to grow at double-digit percentage. It had previously expected high single-digit percentage growth.
CP said its outlook on Canadian grain has improved a little, suggesting grain volumes for the rest of the year would not be impacted by dry, hot weather that affected wheat and canola crop production in the country’s western farm belt.
Canadian grain shipped by the company rose 4 percent in the reported quarter.
“We also believe that the company is set to benefit from its continuing network improvements and from stronger pricing in the next couple years,” Edward Jones analysts said in a note.
The price increases that Canadian Pacific receives for shipments is likely to pick up in 2018 and 2019, according to the note.
CP Chief Executive Keith Creel expects price increases to be in the 3 percent range in 2018 and between 3 percent to 4 percent in 2019.
The company reported an operating ratio — operating costs as a percentage of revenue — of 56.7 percent, down from 57.7 percent, a year earlier.
Lower the ratio, more efficient the railroad.
CP’s net income rose to C$510 million ($407.15 million), or C$3.50 per share, in the third quarter ended Sept. 30, from C$347 million, or C$2.34 per share, a year earlier.
Excluding items, the company earned C$2.90 per share, ahead of analysts’ average estimate of C$2.87, according to Thomson Reuters I/B/E/S.
Calgary-based CP’s total revenue rose nearly 3 percent to C$1.60 billion.
Earlier on Tuesday, U.S. rival CSX Corp CSX.O also delivered an earnings beat on higher coal and consumer goods shipments. ($1 = C$1.25)
Reporting by John Benny in Bengaluru; Editing by Shounak Dasgupta
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