KiwiRail earnings rise, despite disruption
WELLINGTON: Disruption to South Island rail services caused by the November 2016 Kaikoura earthquake masked a continuation in improved operating earnings from stateowned railway operator KiwiRail in the six months to December 31.
The company reported an operating surplus of $15 million for the period, which would have come in at $40 million once the oneoff costs associated with the closure of the main trunk line between Picton and Christchurch were stripped out.
While earthquake impacts would still be felt in the second half of the current financial year, KiwiRail was still on track to deliver operating earnings of between $30 million and $50 million, chief executive Peter Reidy said in a statement.
In the previous comparable period, which included the first few weeks of the outage caused by the massive Kaikoura earthquake, KiwiRail reported operating earnings of $11 million, or $23 million underlying once earthquake impacts were taken out.
As always, the national rail carrier did not report a statutory profit on its activities, reporting a $193 million loss for the halfyear. That reflects the fact that revenue earned ‘‘above rail’’ is always far lower than would be required to fully maintain the capitalintensive network. However, the importance of maintaining a rail network for wider economic and national interest reasons means both the previous and present governments accept KiwiRail will always make accounting losses.
The result for the halfyear was achieved on revenue of $292.7 million, 1.9% down from the $298.3 million recorded in the last six months of 2016, and reflecting the fact that the Kaikoura link was restored only in September last year.
Operating expenses, at $277.4 million, were 3.5% lower than in the previous comparable period.
Ports revenue from KiwiRail’s trucking and rail services was up by 16% on the halfyear, which chairman Trevor Janes said was a ‘‘strong result’’ when placed against overall container volume growth of 7% nationally in the same period.
Forestry revenues rose 8% as the socalled ‘‘wall of wood’’ from maturing plantation forests starts to come onstream.
Dairy industry and coal volumes rose, contributing to a 6% increase in bulk freight revenue.
Poor weather and ‘‘significant and unexpected’’ repair costs on the company’s ageing South Island locomotive fleet contributed to a ‘‘messy’’ six months, Mr Janes said in a statement.
KiwiRail was ‘‘working closely with the Government on the urgent need for longerterm funding for the organisation, which is critical for efficient procurement, planning and safety’’.
The Interislander ferries showed a 12% increase in commercial vehicle ‘‘lane metres’’ as more freight had to travel by road while the rail outage persisted.
Interislander ferries’ passenger revenue rose by 7% and yields on vehicle crossings improved.
Mr Reidy said KiwiRail was targeting operating savings of $7 million this year, building on $45 million of productivity improvements in the past two years.
Announcements relating to the revival of some mothballed regional rail services are expected when the Government unveils detail of its $1 billion a year regional economic development fund, in Gisborne, on Friday. — BusinessDesk