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A decline in grain and intermodal traffic and rise in fuel and material costs colored Canadian Pacific’s third-quarter financial results.

Revenue increased 4.6 percent to $1.3 billion, but operating income fell 3.9 percent to $324.6 million, net income decreased 5.3 percent to $186.8 million and diluted earnings per share tumbled 6 percent to $1.10 compared with third-quarter 2010 results (all figures are in Canadian dollars). In addition, CP’s operating ratio increased 2.1 points to 75.8 and traffic decreased 2.5 percent to 668,300 carloads.

Grain revenue declined 3.2 percent to $290.6 million and volume fell 2.5 percent to 116,900 units, while intermodal revenue dropped 6 percent to $338.6 million and volume plunged 10.1 percent to 255,200 units.

However, coal revenue jumped 23.7 percent to $146.5 million and volume inched up 1.8 percent to 84,700 units; sulphur and fertilizers revenue climbed 23.6 percent to $136.1 million and volume surged 15.8 percent to 48,400 units; industrial and consumer products revenue rose 10.6 percent to $265.8 million and volume increased 4.5 percent to 111,200 units; forest products revenue increased 7.6 percent to $50.7 million and volume escalated 3.3 percent to 18,800 units; and automotive revenue rose 7.5 percent to $80.1 million and volume ratcheted up 2.5 percent to 33,100 units.

"We currently see strength in our bulk franchise, but remain vigilant in monitoring economic signals from Asia,” said CP President and Chief Executive Officer Fred Green in a prepared statement.

Meanwhile, operating expenses increased 7.2 percent year over year to $1 billion. Fuel costs shot up 43.2 percent to $237.8 million as the average price per gallon soared 47 percent to $3.44 (in U.S. dollars) and material costs ballooned 30.1 percent to $56.2 million. In addition, purchased services and other costs climbed 7.3 percent to $210.9 million.