KiwiRail has released its annual result showing an improved operating surplus in its above rail operations of $156.5 million for the year to June, up 17% on the prior year.
Total freight revenue was $501.3m, up 8% for the year which included solid growth in the import/export (IMEX) market.
Chief executive Peter Reidy says the dairy sector also contributed to a strong finish for the year as export prices strengthened.
“We have continued strong commercial discipline and re-negotiated several large commercial freight contracts with Port of Tauranga and Fonterra during the year,” he says.
During the year, $1.3 billion was invested in assets and capital projects including progress on three major NZ Upgrade Projects (Wiri to Quay Park/Third Main, Papakura to Pukekohe electrification, and Drury Rail Stations).
The first stage of Auckland’s Rail Network Rebuild was completed on time, and construction continued on its Waltham mechanical hub in Christchurch.
Production also commenced on the first two of 57 new, state-of-the-art, low-emission mainline locomotives.
KiwiRail says it continues the aim of making its above rail business self-sustaining under the new funding model, which sees the ‘below rail’ (the network component of the railway) fully funded through the National Land Transport Fund (NLTF), supported by the Crown and by track-user charges from the market.
The below rail EBITDA was neutral, in line with budget and the previous year.
With an end to Covid lockdowns and a rebound in tourism, its Interislander operation improved performance with a 42% increase in revenue to $151.1m.
“We had fleet reliability issues in January and February which severely disrupted our customers and New Zealand,” Reidy says.
“We have acknowledged and taken full responsibility for these events, which has led us to invest and partner with global experts to improve the reliability and on-time performance of our ageing fleet for our customers.
“Overall, Interislander reliability improved from 79% in FY22 to 87% in FY23, and is now well above the 90% mark.”
Reidy says more steps are being taken to reduce carbon emissions across the network.
“The Government has announced funding that will allow us to look in detail at how best to electrify more North Island rail lines including the freight-heavy Golden Triangle (Tauranga – Hamilton – Auckland), and how best to complete electrification on the main North Island rail line between Palmerston North and Wellington.”
Severe weather events in Auckland and Northland, and of Cyclone Gabrielle had an adverse impact of $8.5m on KiwiRail’s operating surplus.
The KiwiRail team is working 24/7 to repair the damage in the wake of those events, with the rail line to Napier recently reopening ahead of schedule and the network to Northland expected to reopen early in the New Year.
Reidy says progress has also been made over the past 12 months in strengthening KiwiRail’s leadership capability, operational discipline, asset management and investing in customer and commercial growth.
Driving safety performance improvements is a personal commitment, he says.
“Safety is a proxy for leadership, and we are starting to see a shift in reducing high-risk incidents.
“We’ve embarked on a leadership safety culture reset supported by global experts, a two-year roadmap and funding commitment from our board.
“I am confident the changes we are making will build a belief that all injuries and occupational illnesses are preventable, and that management is responsible to ensure everyone goes home safe at the end of each day.
“Despite the challenges during the year, we have continued to invest in our infrastructure and lifted asset availability and reliability for customers.
“This positively impacted our export-led customers, enabling them to deliver stronger export volumes, particularly in the final quarter,” he says.
Challenging conditions are expected to remain for the year ahead, with a softening freight market and a general tightening of the economy.
“We are responding with a series of measures including fuel minimisation, train optimisation and control of our compressible cost and overheads,” Reidy says.
