KiwiRail posts $407m loss
KiwiRail has reported a $407 million loss for the half year to December 31, compared to a $65m loss a year earlier.
Chairperson David McLean said the result reflected weaker than expected economic activity and a “challenging trading environment”.
Rail freight volumes were down 15% largely through reduced import container volume and the flow on impact to lower domestic freight transport demand.
“While export volumes were in line with expectations, high inventory levels in customer warehouses and lower economic activity in China impacted import flow to New Zealand,” he said.
“The lower imports translated into very soft domestic demand for goods transported throughout the country, affecting transport operators across the sector.
The scenic tourism business returned to 70% of pre-Covid passenger levels. Forward bookings were above expectations with additional capacity and higher value tourism packages on the three tourism rail routes, McLean said.
Revenue from scenic tourism was up 53% to $14.2m compared to the same period a year earlier. The state-owned company spent $707.3m on new rolling stock, the completion of track replacement between Whangārei and Kauri in Northland, and the practical completion of the Integrated Rail
Management Centre in Auckland, which controls rail traffic on the busiest part of the network. KiwiRail was winding down the axed Inter-Island Resilient Connection (iRex) project to build two new ferries and associated landside and port infrastructure after the new Government withdrew funding in December. The company had sunk $424m in to the iRex project.
Chief executive Peter Reidy said market conditions were volatile over the first six months with “a challenging domestic economy, and international shipping constraints that increased freight costs”.
“Most domestic sectors are reporting lower levels of demand, in particular construction, manufacturing and retail, which has impacted import container volumes and domestic freight transportation.”
Supply chain and labour costs had increased in the first half due to inflation, but were now easing, Reidy said.
Fonterra had a slow start to the export dairy season, but volumes are forecast to be in line with last year. Meat exports were down by 15% compared to the previous period and log export volume up with an increase from forestry in Bay of Plenty.
Reidy said the outlook for the second half of the financial year remained challenging.
“The market is challenging for our customers with activity in many sectors – including construction, manufacturing, retail and export – forecast be subdued for the remaining six months. Tourism is flattening out, after recent growth, at 80% pre-Covid levels.”