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A stretch of severe weather in December dampened carloadings, but didn't completely rain on Canadian Pacific Railway's fourth-quarter financial results. However, escalating fuel costs throughout the period were another story.

Total revenue was flat at $1.2 billion. Excluding the impact of foreign exchange, revenue would have increased 5 percent, CPR said. In addition, the Class I's operating ratio increased 1.2 points to 74.3, operating expenses — unable to shake the effects of diesel prices — rose 1 percent to $887 million and operating income declined 5 percent to $307 million compared with fourth-quarter 2006 totals.

"Even with the impact of foreign exchange, we had revenue growth in some sectors, including industrial and consumer products, intermodal and automotive," said CPR President and Chief Executive Officer Fred Green in a prepared statement. "However, the rapid rise in the cost of fuel and the inherent lag in our fuel recovery programs combined with the net negative impact of foreign exchange to reduce our operating income."

A lone bright spot: Net income more than doubled to $342 million primarily because of lower future Canadian income tax rates.

For the full year, CPR's revenue increased 3 percent to $4.7 billion, income rose 7 percent to $675 million, operating ratio improved by 0.1 points to 75.3 and operating expenses went up only 3 percent — despite high fuel costs — to $3.5 billion compared with 2006 totals.

This year, the railroad anticipates annual revenue growth between 4 percent and 6 percent, an operating expense increase between 3 percent and 5 percent, and capital spending between $885 million and $895 million — flat compared with 2007.

"We continue to see strong demand in our bulk portfolio for 2008," said Green. "And this, coupled with improved yield and a renewed focus on our Integrated Operating Plan, will drive results."