KiwiRail, the state-owned rail service, has reported a 21% drop in operating profit to $37.3 million in the six months ended December 31, as a 0.7% gain in revenue to $365.5 million was outpaced by a 3.9% lift in expenses to $328.2 million.
Full results won’t be made public until they are tabled in Parliament, but the SOE says it has renewed focus on cutting costs in new recruitment and major capital purchases, reports National Business Review.
KiwiRail cut its forecast operating profit to between $90 million and $100 million in the year ending June 30, a reduction of $20 million to $30 million from its Statement of Corporate Intent.
It estimates the outage of the Aratere ferry, which is undergoing repairs after its propeller fell off in November, will cost between $20 million and $30 million in the financial year.
“The financial impact is significant and we are doing all we can to mitigate that impact,” chairman John Spencer said. “We are also in discussions with our shareholder (the government) to ensure we have the necessary financial capacity for the remainder of the year.”
Accoring to NBR, KiwiRail has previously said it doesn’t expect to make a net profit within the next decade as it writes down the carrying value of its assets to market value, while investing in renewing its network.
The company’s domestic freight sector grew 11% in the period on increased export and liquid milk volumes, and it anticipates further growth in log volumes. The Wellington passenger businesses, TranzMetro, increased passenger numbers in the half, and the Scenic passenger unit is showing signs of growth after a concerted marketing effort, KiwiRail says.
