Regional U.S. railroad Kansas City Southern (KSU.N) beat expectations for first-quarter earnings, reporting a 36 percent jump in quarterly profit driven by an increase in overall carload volumes, including a significant rise in energy revenue.
"The long-term outlook continues to be extremely positive,” chief executive Patrick Ottensmeyer said in a call with analysts. "The way I look at this quarter is solid and clean.”
Nevertheless, shares slipped on Friday on worries about the company's operations in Mexico.
"These were solid results," said Justin Long, a research analyst with Stephens.
But he said "continued uncertainty" about President Donald Trump's promise to renegotiate the North American Free Trade Agreement and a Mexican antitrust investigation are weighing on the stock.
The railroad has an extensive network in Mexico.
Shares were down 1.18 percent at $89.50.
The company in the first quarter also posted an operating ratio - a measure of operating costs as a percentage of revenue - of 65.4 percent, a 1.2 point improvement over the year ago period.
Still, Ottensmeyer said on the call that the company is "not declaring victory" on its operating ratio.
The lower the operating ratio, the more efficiently the railroad is running.
The company is facing a probe by Mexico's antitrust watchdog, which said in March that a lack of competition in Mexico's rail freight sector has resulted in high customer prices.
The railroad on Thursday said it filed a challenge to that preliminary report. Ottensmeyer on Friday's analyst call declined to go into further details.
Kansas City Southern's net income available to common stockholders rose to $146.5 million, or $1.38 per share, in the first quarter ended March 31, from $107.7 million, or 99 cents per share, a year earlier.
The company posted adjusted earnings per share of $1.17.
Total revenue increased 8.3 percent to $609.5 million.
Excluding the impact of Mexican peso depreciation, revenue increased 11 percent, said the company.
Revenue in the company's chemical & petroleum business rose 8 percent, while energy revenue soared 64 percent.
(Reporting by Rachit Vats in Bengaluru and Luciana Lopez in New York; Editing by Phil Berlowitz)