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Today, Canadian Pacific reported second-quarter diluted earnings per share of 98 cents, up 23 percent, and net income of $166.6 million, up 23 percent compared with second-quarter 2009 figures.

Revenue rose 20 percent to $1.2 billion, operating income jumped 48 percent to $274.1 million, volume increased 20 percent to 676,400 units and CP’s operating ratio improved 4.3 points to 77.8. Analysts polled by Thomson Reuters had expected adjusted earnings of 83 cents per share (CP’s clocked in at 92 cents per share) and revenue of $1.2 billion.

However, operating expenses rose 13 percent to $960.1 million primarily because compensation/benefit costs increased 8 percent to $349.7 million, fuel costs surged 51 percent to $177.9 million and purchased services/other costs went up 18 percent to $203.3 million.

"We leveraged volume growth in the quarter to deliver a solid financial performance through a keen focus on cost management," said CP President and Chief Executive Officer Fred Green in a prepared statement. “Our proven track record of quickly adjusting our resources to meet changing volume demands position us well for the second half."