TORONTO, Jan 30 (Reuters) - Canadian National Railway Co , the country's largest rail operator, reported higher quarterly results on Thursday and said full-year volumes and revenue hit a record, but results were tempered by extreme winter weather in December and came in slightly below estimates.
CN Rail, which cautioned the weather challenges continued into January, raised its quarterly dividend by 16 percent.
"The extreme cold weather brought us higher labor and higher purchased services and material cost in December, which at this point I would probably estimate to be approximately CAD15 million," said Chief Financial Officer Luc Jobin.
"Unfortunately, this little twist of Mother Nature is also extending itself well into January and consequently we are having a similar monthly cost pressure to contend with starting in 2014."
The Montreal-based railway reaffirmed its 2014 outlook first issued last month, when it said it was targeting double-digit growth in earnings per share in 2014 from the C$3.06 adjusted diluted earnings per share in 2013.
The company's operating ratio, a key measure of efficiency, rose 1.2 points to 64.8 percent during the quarter. The lower the operating ratio number, the better.
While CN still reported industry-leading efficiency, the company said it faced "significant headwinds" on issues including pensions.
The railroad's safety record in 2013 improved 9 percent, it said, even as it dealt with a series of high-profile derailments, including two in New Brunswick in January, one of which caught fire and burned for days.
The rail and energy industries have been under scrutiny following a disastrous accident in July 2013, when a runaway train carrying crude oil exploded in the heart of Lac Megantic, Quebec, killing 47 people.
The amount of crude being shipped by rail has surged over the last few years as oil production exceeds pipeline capacity. CN said its revenue for petroleum and chemicals during the quarter jumped 22 percent, helped in part by higher freight volumes and market share gains.
Net income rose to C$635 million ($567.98 million), or 76 Canadian cents per share, in the quarter ended Dec. 31. This compares with a net income of C$610 million, or 71 Canadian cents per share during the same period last year.
Revenue during the quarter rose 8 percent to C$2.75 billion.
Analysts had been expecting earnings per share of 77 Canadian cents and revenue of C$2.75 billion, according to Thomson Reuters I/B/E/S.
The company will pay a quarterly dividend of 25 Canadian cents on March 31.
On Wednesday, CN rival Canadian Pacific Railway reported record quarterly results despite also taking a hit from extreme winter weather in December.
The country's second largest railroad also forecast its adjusted earnings would climb by at least 30 percent in 2014 with revenue growing by 6-7 percent from 2013.
Shares of CN Rail, which reported after markets closed, finished up 2.2 percent at C$59.34 on the Toronto Stock Exchange. The stock split in November.