* Adjusted earnings per share C$1.91 vs estimated C$1.95
* Fourth-quarter revenue rises 7 pct to C$1.6 bln
* Operating ratio improves 890 basis points to 65.9 pct
* CP sees 2014 adjusted profit up 30 pct or more
* Sees revenue growth of 6-7 pct
(Updates with analysts' comments, market reaction, details)
TORONTO, Jan 29 (Reuters) - Canadian Pacific Railway , the country's second largest railroad, reported a weaker-than-expected quarterly profit on Wednesday, but forecast adjusted earnings would climb at least 30 percent in 2014 as revenue rises.
Shares of the Calgary, Alberta-based railway rose 2.5 percent to C$162.05 on the Toronto Stock Exchange aftersinking briefly in early trade.
The company said freight revenue rose 7 percent in the fourth quarter, bolstered by a 23 percent jump in revenue from shipments of industrial and consumer products, including crude oil.
Shipping crude via railroads has surged across North America in the past few years as a boom in oil production has exceeded pipeline capacity. But a series of disastrous train derailments has put oil-by-rail under intense scrutiny as its safety is questioned.
CP Rail said on Wednesday it expects 2014 adjusted earnings to increase 30 percent or more and revenue to grow by 6-7 percent from 2013.
"While the Q4 results were only slightly below, and the language around guidance suggests upside, we believe management's tone on the call will largely determine the extent to which the market measures the conservativeness of this forecast," RBC Capital Markets analyst Walter Spracklin said in a client note.
"It's our guess that the tone will be very optimistic and therefore, we would expect the market to ultimately react favorably to this report."
BMO analyst Fadi Chamoun, who expects CP to buy back shares this year, said in a note that the railroad performed well despite challenging weather conditions during the quarter. He noted that CP improved its operating ratio by nearly 900 basis points in the quarter.
A railway's operating ratio shows the percentage of revenue needed to maintain operations and is a key measure of efficiency. The lower the number the better.
The company said its adjusted operating ratio was 65.9 percent in the fourth quarter. It forecast its operating ratio would be 65 percent or lower in 2014.
Net profit rose to C$82 million ($73 million), or 47 Canadian cents a share, in the quarter ended Dec. 31, from C$15 million, or 8 Canadian cents a share, a year earlier.
Excluding a pretax asset impairment charge of C$435 million and other one-time items, the company earned C$1.91 a share.
Analysts had expected earnings of C$1.95 a share, according to Thomson Reuters I/B/E/S.
Revenue was up 7 percent at C$1.6 billion.
Earlier this month, CP said it will sell the western portion of its Dakota, Minnesota and Eastern (DM&E) line, which encompasses operations in parts of Minnesota, South Dakota, Wyoming and Nebraska, to Genesee & Wyoming Inc for about $210 million. The deal includes 660 miles of track, about a quarter of the DM&E line that CP acquired in 2008.
(Additional reporting by Ashutosh Pandey in Bangalore; Editing by Savio D'Souza, Jeffrey Hodgson and Peter Galloway)