Canadian National Railway Co. raised its earnings outlook for the year as it reaps the benefits of a strong U.S. dollar and a decision to impose higher fuel surcharges on customers. 

The Montreal-based railway expects adjusted earnings per share to grow 25 per cent this year over 2021. Previously, it told investors to expect 15 per cent to 20 per cent growth. Canadian National beat analysts’ estimates for sales and profit in the third quarter. Revenue was $4.51 billion (US$3.3 billion), exceeding the consensus forecast of $4.32 billion. 

The revenue boost was due to a combination of higher freight prices, fuel surcharges, strong volumes of grain and coal and the rally in the dollar, which helped the top line when translated back to Canadian currency. 

Canadian National expects to see continued strong demand from grain in Canada and in the U.S., amid lower water levels on the Mississippi River. The need for grains, coal and fertilizer are expected to remain robust following Russia’s invasion of Ukraine, company executives said. 

“We’ll contract where we need to contract, but there’s a big chunk of our book that won’t be hit by recession,” CEO Tracy Robinson said Tuesday on an earnings call.

The nation’s largest railway has been under pressure to boost efficiency and has underperformed rival Canadian Pacific Railway Ltd. over the past several years. It had cut its profit outlook in April, saying costs would be much higher because of the spike in fuel prices triggered by Russia’s war in Ukraine.

But now it appears the company has been able to pass those costs along. Canadian National earned $2.13 a share on an adjusted basis in the quarter, beating forecasts for $2 per share. 

“We have a busy fourth quarter, with a strong start in the Canadian grain crop, and we are resourced for the months ahead. We are pleased to be raising our 2022 outlook to reflect our performance,” Robinson said in a statement.