KiwiRail has reported an operating surplus of $63.2 million for the financial year, up $23 million compared with last year.
Revenue was up 7% on the previous year to $681.6m and the company expects to build on that in FY22.
It was driven by solid revenue growth in the domestic freight markets for the national rail provider and operator of the Interislander ferry service across Cook Strait.
Road freight operators are also now among KiwiRail’s largest customers, and their business with rail is growing, the company reports.
Domestic and export revenues increased with forestry freight revenue up 7% on the previous year, bulk freight up 11%, domestic 13%, and commercial vehicle freight on the Interislander up 2%.
Chief executive Greg Miller says there is much to be proud of in the result.
“A focus on cost control while lifting our commercial performance and attracting and retaining the right people for the right tasks, is paying off.
“We’re focusing on leadership and have bounced backed well from COVID-19, with most parts of the business showing good revenue growth,” he says.
“Our container freight export revenue was on a par with the previous year, which reflects the ongoing turmoil in international supply chains caused by COVID-19.
“Closed borders continue to affect our tourism services, with a revenue fall from our three scenic trains. We reduced the financial impact by tailoring our timetables, fares and schedules to match demand, and retained our people, but this remains a difficult environment for tourism operators. We know our scenery is as good as any other train trip in the world and we look forward to better days ahead,” Miller says.
KiwiRail also saw the Government continue its commitment to rail with a significant investment of $1.3 billion in Budget 2021.
This was on top of previous investments of $1.2b in Budget 2020 and $1b in 2019.
It’s preparing the rail operator for freight growth and to grow its skills and team capability to deliver on the $4.5b 10-year Rail Network Investment Programme.
“We are grateful for this Government support, on top of investments through the New Zealand Upgrade Programme and the former Provincial Growth Fund to fund critical capital projects we are delivering which are truly revitalising rail for New Zealand.
“We have seen a roughly four-fold increase in our capital expenditure in the past five years with FY21 capex of $1.05 billion, compared with $257m in FY16.
“An $8 billion transformation of rail is underway and KiwiRail is growing its role as an essential and sustainable part of New Zealand’s supply chain,” Miller says.
The Government’s investment are being seen in significant progress in making the rail network more resilient and reliable, he says.
In Northland for example, 700 workers in five months replaced five old bridges and increased the clearances in 13 old tunnels to allow hi-cube containers to be carried on the line. The line opened in January and is now earning revenue and supporting the Northland economy.
Around the country, ageing rolling stock will be replaced and improvements are being made to the Auckland and Wellington commuter networks.
An intensive effort in Auckland saw 600 infrastructure workers from around New Zealand converge on the network to replace and repair worn rails. Working around the clock, including through Christmas, they replaced 130km of rail; work which normally would be done over several years.
FY21 also saw the launch of the new Te Huia commuter service between Hamilton and Auckland.
KiwiRail signed a USD$369 million contract with Korean shipyard Hyundai Mipo Dockyard (HMD) for the delivery of two new, state-of-the-art rail-enabled Cook Strait ferries. The first ship will arrive in 2025 and the second in 2026.
Miller also safety “remains critical” to the business and the number of high-risk events fell significantly, dropping from 360 to 85 and the total number of recordable injuries fell to 223 in FY21 from 238 in FY20.
KiwiRail is well on the path to sustainability and profitability, he says.
“Rail is a valuable part of the New Zealand economy. An updated independent assessment of the economic benefits it delivers, released in May, shows $1.7 billion to $2.1 billion in value to New Zealand each year.
“Our customers care about reducing their carbon emissions, and KiwiRail does too, so we are taking them with us as we integrate improved environmental performance in the supply chain.”
