(Reuters) - Canadian Pacific (TO:CP) on Wednesday reported second-quarter profit above estimates as lower costs helped the railroad cushion a drop in freight activity due the coronavirus crisis, and prompted it to raise its 2020 earnings forecast.
Shares of Canadian Pacific were up 1% at C$368 in morning trading.
The company's operating ratio, a measure of operating expenses as a percentage of revenue and a key metric for Wall Street, fell to 57% from 58.4% a year earlier, as fuel expenses plunged 44%. A lower operating ratio signals improved profitability.
"While economic uncertainty remains, we're controlling what we can control - our costs," Chief Executive Officer Keith Creel said in a statement.
Canadian Pacific now expects its full-year adjusted earnings per share to rise this year, from its prior forecast of flat earnings.
Canadian railroads were expected to benefit from a growth in crude shipments this year as oil producers looked for alternatives to congested pipelines.
But the COVID-19 pandemic has sapped demand for crude, resulting in a 28% drop in the company's energy, chemicals and plastic shipments.
Canadian Pacific's total carloads, the amount of freight loaded into cars during a specified period, declined 12%.
The company's net income fell to C$635 million, or C$4.66 per share, in the quarter ended June 30, from C$724 million, or C$5.17 per share, a year earlier.
However, on an adjusted basis, Canadian Pacific earned C$4.07 per share, beating analysts' estimates of C$3.77, according to IBES data from Refinitiv.
Its revenue declined 9.3% to C$1.79 billion, but was above expectations of C$1.77 billion.