KiwiRail has announced a group operating surplus of $81.6 million for the six months to December 31, an increase of 25.7% on the same period last year.
The state-owned enterprise, which owns and operates New Zealand’s rail network and the Interislander Cook Strait ferries, says the half-year result reflects a return to full service of its Interislander and scenic passenger operations, and the lessening impact of Covid-19.
The operating surplus represents earnings before depreciation and amortisation, interest, impairment, capital grants and fair value changes and relates to KiwiRail’s ‘above rail’ commercial operations.
The ‘below rail’ network component of the railway is fully funded through the National Land Transport Fund (NLTF), supported by the Crown and track-user charges from the market.
Half-year operating revenue for the ‘above rail’ business was $398.2m, up 25% on HY22.
The return of Kaiarahi to the Cook Strait run after an extended absence due to a major gearbox failure, along with the arrival of international passengers helped lift Interislander revenue to $62.3m, up 31% on HY22.
The impact of the re-opening of the borders was also seen in the $7.5m rise in scenic revenue (excluding commuter) to $9.3m, as all three scenic services were resumed following a short period of hibernation in HY22.
The IMEX (import/export) freight sector also recorded good growth, up 6% ($4.9m) on HY22 to $84.3m.
Below rail operating expenses (funded primarily through the NLTF and recoveries from Auckland and Wellington metros) for HY23 were $99m. The expenses represent the cost of maintaining, operating and managing the 3,700km rail network, including the Auckland and Wellington metro areas.
Investment programme
KiwiRail chair David McLean says the result is encouraging and provides a platform for KiwiRail to become self-sustaining.
“We are in the midst of a major capital investment programme and business transformation. The Government has committed $8.6 billion for capital projects through to 2030.
“That investment is designed to restore a resilient and reliable railway, one that allows KiwiRail to build stronger connections for a better New Zealand as part of an integrated transport system.
“Rail currently carries about 13% of the country’s freight task. That needs to grow to support New Zealand’s supply chain and cut the country’s transport emissions. The way to do that is for KiwiRail to improve its service reliability, and that means updating our assets and improving our network,” McLean says.
During HY23, KiwiRail carried just over two billion net tonne kilometres of freight. It points out this is 142,897 fewer tonnes of CO2 emissions than if that same freight had been moved by truck along with 53.1 million litres of fuel savings.
Meanwhile, chief executive Peter Reidy says substantial progress is being made with KiwiRail’s capital investment programme.
“The iReX programme – which will see the arrival of two new purpose-built rail-capable ferries beginning in 2025, along with the new terminals to serve them – is well underway.
“In HY23 we began the Papakura to Pukekohe electrification to improve the Auckland commuter network.
“We also signed the contract for a once-in-a-generation upgrade to our train control system which will provide greater automation and resilience across the entire network, and continued work on the Wiri to Quay Park Third Main project.
“Work also continued on improvements to the Wellington network, including upgraded tracks for the Wairarapa and Capital Connection lines, along with refurbishment of Capital Connection carriages.
“We are also continuing the upgrade of the North Auckland Line.”
Reidy acknowledges the impact of recent severe weather events which impacted the rail network in northern and eastern parts of the North Island.
“Our teams are working hard to restore services for customers, although some of the damage is considerable and we expect some impact to revenues in the second half of our financial year, “ he says.
“We also experienced disruption to our Interislander services and are working closely with Maritime New Zealand to safely return to schedule and minimise ongoing disruption for passengers and freight customers.”
You can read KiwiRail’s half-year report here.
