Canadian National Railway Co (CNR.TO) reported a 16.2 per cent fall in first-quarter profit on Monday as operating expenses shot up and the railroad company cut its 2018 earnings outlook.

The company said it now expects 2018 adjusted earnings $5.10 to $5.25, compared with its earlier estimate of between $5.25 to $5.40.

Operating expenses rose 9 per cent to $2.16 billion in the quarter as the railroad operator spent more to move more volumes in a harsh winter.

Operating ratio, a key metric watched closely by analysts, rose to 67.8 per cent from 61.8 per cent. A lower ratio indicates higher efficiency.

Canada's largest railroad said total carloads rose 2.9 per cent in the quarter ended March 31, while rail freight revenue per carload decreased by 3.1 per cent.

The Montreal-based company's net income fell to $741 million, or $1 per share, from $884 million, $1.16 per share, a year earlier.

Excluding one-time items, CN earned C$1 per share, just a cent higher than the analysts' average estimate, according to Thomson Reuters I/B/E/S.

The company's revenue, which dropped for the first time in four quarters, was at $3.19 billion compared with $3.21 billion a year earlier.

Last week, CN's smaller rival Canadian Pacific Railway (CP.TO) reported first-quarter profit above analysts' targets as it shipped higher volumes of commodities, offseting the impact of higher expenses.