Canadian National Railway second-quarter profit increased 18 per cent to $847 million on higher freight volumes, mainly from the record Canadian grain crop.

Like its rival CP Rail, CN saw record volumes of freight in the second quarter, recovering quickly from the icy winter.

Revenue from moving grain and fertilizers jumped 35 per cent, revenue from metal and minerals was up 20 per cent and intermodal and oil shipment revenues were up 17 per cent in the quarter.

The Montreal-based railway said adjusted profit amounted to $1.03 per diluted share, up from $717 million or 84 cents per diluted share a year ago. Revenues rose 17 per cent to $3.12 billion from $2.67 billion a year ago.

Grain backlog cleared

A weaker Canadian dollar and freight rate increases helped boost earnings with revenue ton-miles up by 14 per cent and carloadings increasing 11 per cent. Western Canada grain hopper car movements were up nearly 70 per cent from the prior year and the railway expects to set a record for the year.

"We are pleased that the Canadian grain supply chain CN serves is now back in sync," CEO Claude Mongeau said.

After facing pressure from grain farmers and the federal government to move last year’s record crop to market, both CN and CP boosted shipments. The waiting list now represents only about one week of shipments from the Prairies, while grain vessel lineups at all ports are back to normal, CN said.

CN Rail revised its 2014 financial outlook due to growth opportunities in intermodal, bulk and merchandise markets. It now expects to deliver "solid double digit" EPS growth of over $3.06 per share in adjusted earnings last year. That's up from its prior aim for double-digit growth.

Free cash flow generated should be $1.8 billion to $2 billion, up from $1.6 billion to $1.7 billion in the prior forecast.

With files from the Canadian Press