Canadian National Railway Co , the country’s largest rail operator, reported higher quarterly earnings on Thursday, saying its full-year volumes and revenue hit record highs, but the results were tempered by extreme winter weather in December and came in slightly below estimates. CN Rail, which cautioned the weather challenges continued into January, raised its quarterly dividend by 16 percent. “The extreme cold weather brought us higher labor and higher purchased services and material costs in December, which at this point I would probably estimate to be approximately C$15 million,” said Chief Financial Officer Luc Jobin. “Unfortunately, this little twist of Mother Nature is also extending itself well into January and consequently we are having a similar monthly cost pressure to contend with starting in 2014.” The Montreal-based railway reaffirmed its full-year 2014 outlook, first issued last month, when it said it was targeting double-digit growth in earnings per share from the C$3.06 adjusted diluted earnings per share in 2013. The company said the weaker Canadian dollar will be a positive tailwind compared to last year. The company’s operating ratio, a key measure of efficiency in the industry, rose 1.2 points to 64.8 percent during the quarter. The higher the ratio, the less efficient the operation. While CN still reported industry-leading efficiency, the company said it faced “significant headwinds” on issues including pensions. RAIL SAFETY The railroad’s safety record in 2013 improved 9 percent with 33 main track accidents, CN said, even as it dealt with a series of high-profile derailments, including two in New Brunswick in January, one of which caught fire and burned for days. The amount of crude being shipped by rail has surged over the last few years as oil production exceeds pipeline capacity. But rail and energy industries have been under scrutiny following a disastrous accident in July 2013, when a runaway train carrying crude oil exploded in the heart of Lac Megantic, Quebec, killing 47 people. CN chief executive Claude Mongeau told analysts that regulatory proposals for tougher tank cars less prone to puncture would likely not disrupt forecasts on shipment volumes. “As far as our own franchise, we move a lot of our business in coil insulated cars or we move a lot of our business in cars of the new standard ... and those cars are materially safer,” he said. The newer cars are about 50 percent less likely to fail compared to the older DOT-111 cars, Mongeau said, which are currently a key focus among regulators, while coil insulated cars are “probably” 70 to 75 percent less likely to leak. “So we are dealing with safer cars. A lot of what we move is also crude oil from Western Canada that is heavy oil that has a higher flash point, and the light oil over time will migrate toward safer cars,” he added. BY THE NUMBERS CN said its fourth-quarter run rate in crude shipments was nearly 25,000 carloads and almost 75,000 for the full year. CN’s revenue for petroleum and chemicals jumped during the quarter, helped in part by higher freight volumes and market share gains. Despite strong grain export demand, revenue growth in that segment was only 3 percent due to the cold weather. Net income in the quarter ended Dec. 31 rose to C$635 million ($567.98 million), or 76 Canadian cents per share. This compares with a net income of C$610 million, or 71 Canadian cents per share, during the same period a year earlier. Revenue during the quarter rose 8 percent to C$2.75 billion. Analysts had been expecting earnings per share of 77 Canadian cents and revenue of C$2.75 billion, according to Thomson Reuters I/B/E/S. Operating income climbed 5 percent to C$967 million. The company will pay a quarterly dividend of 25 Canadian cents on March 31 and said it has set aside about C$1.4 billion to buy up to 30 million shares this year. On Wednesday, CN rival Canadian Pacific Railway posted record quarterly results despite also taking a hit from extreme winter weather in December. The country’s second-largest railroad also forecast its adjusted earnings would climb by at least 30 percent in 2014 with revenue growing by 6-7 percent from 2013. Shares of CN Rail, which reported results after the markets closed, settled up 2.2 percent at C$59.34 on the Toronto Stock Exchange. The stock split in November. By Solarina Ho