Kansas City Southern Railway Co reported better-than-expected first-quarter, saying higher volumes in most of its business lines drove double-digit gains in revenue and offered encouraging signs for the year ahead.

"A number of key economic indicators are showing improving strength in the North American economies," Chairman Michael Haverty said. The company expects second-quarter revenue growth of 30 percent compared with last year's quarter.

It expects core pricing gains to remain stable at 5 to 7 percent after rising more than 6 percent in the first quarter.

Shares were up more than 4 percent at $41 in mid-morning trade.

The Kansas City, Missouri-based railroad posted net income of $32.6 million, or 34 cents a share, compared with a loss of $8.1 million, or 9 cents per share, a year ago.

Revenue rose 26 percent to $436.3 million, beating analysts' expectations of $412.4 million.

Kansas City Southern officials said an upswing in manufacturing helped spur a 15 percent increase in volume.

The increased volume, coming after cost cuts that it made during the economic downturn, helped Kansas City Southern see a record first-quarter operating ratio of 75.2 percent, compared with 86.2 percent a year earlier.

Revenue increased 76 percent for automotive shipments, 39 percent in the intermodal business, 28 percent for agriculture and minerals, 25 percent for chemicals and petroleum, 25 percent for coal and 22 percent for industrial and consumer products.

The company expects Mexican auto production to remain strong through the rest of 2010.

It also said that it had refinanced $290 million of debt. (Reuters)