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UPDATE 2-Kansas City Southern dodges hurricane to beat on revenue, profit

(Adds details from call with analysts)

Oct 20 (Reuters) - Kansas City Southern, the fourth-largest U.S. railroad, on Friday reported a higher quarterly net profit and record operating income, on year-over-year growth at all of its six business units.

The railroad posted third-quarter operating income of $234 million, representing a 17 percent increase from the same quarter a year ago, even as it took a $19 million to $23 million hit from Hurricane Harvey, which devastated the U.S. Gulf Coast in August.

"Despite the severity of the storm and widespread flooding, we recovered quickly from the extended service outage, delivering record third quarter operating income, operating ratio and adjusted earnings per share," Chief Executive Pat Ottensmeyer said.

After adjustments for one-time items, the railroad earned $1.35 per share, versus the $1.31 analysts expected.

The results sent Kansas City Southerns share price up nearly 3 percent in morning trading.

Less positively, the company said it expects a decline in shipments of vehicles, as well as coal and sand used for hydraulic fracturing, for the fourth quarter.

It also faces uncertainty over the future of the North American Free Trade Agreement (NAFTA), as U.S., Canadian and Mexican governments work to renegotiate the 23-year-old trade pact.

Perhaps no other company has been in the NAFTA cross-hairs as much as Kansas City Southern. Freight it ships between the United States and Mexico generates more than a quarter of its total revenue, according to its third-quarter earnings presentation.

The Kansas City, Missouri-based railroad reported third quarter revenue of $657 million, beating the $650.5 million analysts expected, on strength of shipments of cars, coal, chemicals and petroleum.

Carload volumes increased 3 percent from the third quarter of 2016, it said.

The railroad also said it reported a record third quarter operating ratio - a closely watched measure of operating costs as a percentage of revenue - of 64.4 percent, a 2.5 percentage point improvement over third quarter 2016. The lower the operating ratio, the more efficiently the railroad is running.

It posted third-quarter net income of $130 million, or $1.23 per share, up from $121 million, or $1.12 per share, a year earlier. (Reporting by Eric M. Johnson in Seattle; Editing by Chizu Nomiyama and Steve Orlofsky)