Canadian Pacific Railway Ltd. boosted its first-quarter profit by 17 per cent this year, despite bitter winter weather and demands from Ottawa that it move more grain.

Net income rose $254 million or $1.44 a diluted share, the Calgary-based company said today, beating analysts expectations and sending its stock up sharply on the Toronto stock exchange.

CP shares were up 5.5 per cent to $173 by mid-afternoon. It closed up $8.63 at $172.62.

CP Rail said it had its best first quarter in company history. Total revenues were $1.5 billion, an increase of 1 per cent after boosting its shipping of industrial and consumer products, which includes crude oil, and grain.

The federal government ordered the Canadian railways to meet minimum weekly grain delivery volumes this winter after a backlog of Canadian grain was left sitting in silos across the Prairie provinces.

CP said it has been meeting and exceeding the weekly minimum shipment of 5,500 carloads of grain mandated by the government, though farmers pointed to a much larger increase in its delivery of oil by rail.

CEO Hunter Harrison pointed to the exceeding harsh winter conditions the railway faced this year, which forced CP to run slower trains and cut first-quarter profit by 30 cents to 35 cents a share, according to a company webcast.

Reduced workforce

But Harrison oversaw a decrease in operating expenses, including an 8.3 per cent reduction in the workforce, part of the drive to cut jobs and close rail yards he began when he took the top job in 2012.

“Despite a slow start to the year and the reduced capacity which limited our ability to meet strong customer demand, we still have the utmost confidence in our ability to achieve our financial targets for 2014,” he said in a statement to investors.

CP Rail is considered less efficient than its larger rival CN.

Its stock has risen two per cent this year and analysts believe Harrison’s management has put the company on track.

“CP’s management continues to exceed its goals and is tracking over two years ahead of its original targets,” Kam Mangat, an analyst at Salman Partners Inc. said in a note to clients. “We believe there is still more upside to the CP turnaround story as CP implements more initiatives.”

Canadian National earnings

Canadian National Railway, reporting later in the day, also threw off the effects of a cold, snowy winter to increase its net income by 12.2 per cent to $623 million in the first quarter.

It says it earned 75 cents per share for the period ended March 31, 10 cents per share higher than last year and well above analysts expectations.

Excluding gains from asset sales, CN earned $551 million or 66 cents per share, compared with $519 million or 61 cents per share in the prior year. Revenues grew nine per cent to $2.69 billion.

The operating ratio — operating expenses as a percentage of revenues — deteriorated by 1.2 point to 69.6 per cent, but was still better than Calgary-based rival Canadian Pacific Railway, which reported a ratio of 72 per cent for the quarter.

The country's largest railway saw its volumes increase by 0.6 per cent in the quarter from the prior year, helped by new coal contracts, intermodal contracts won from Canadian Pacific, a 14 per cent increase in grain shipments and continued growth in transporting crude.

CN's outlook for the year is good, powered by growth in 2014 from intermodal, crude-by-rail and the bumper grain crop.

The railway transports about $250 billion worth of goods annually across its network spanning Canada and mid-America.

With files from the Canadian Press