Kiwirail has lauded a 25% rise in revenue – and a rise in freight revenue of over $100 million – over the last three years.
“In the last year the KiwiRail group achieved an operating surplus of just over $108 million, compared to the mid-year forecast of up to $107 million, and revenue increased by $11 million to $727 million,” chairman John Spencer told the annual meeting in Christchurch..
“The freight business, which earns 60% of overall revenue, has continued its growth momentum with a revenue result of $467 million – a $9 million increase from last year.
“This result, and the other streams of work going on to improve both productivity and safety within the business, shows that the momentum to turnaround this business has not abated since the company was established just over five years ago.”
Over the last four years capital expenditure, excluding the hundreds of millions spent on upgrading the metro networks, has exceeded $1.3 billion. This includes $750 million from Government and $620 million from KiwiRail’s earnings and other sources such as grants and land sales.
“We simply can’t improve and grow the business unless we continue to invest in new equipment and better infrastructure,” says Spencer.
“We have spent over $300 million in the last financial year on 20 more new locomotives, 300 new wagons and rail infrastructure upgrades.
“This has directly led to improvements in safety, for example maintaining a decade long low in mainline derailments, on-time performance, utilisation and freight capacity.”
Spencer went on to say while he was pleased with the company’s progress, despite the challenges faced during the year, he was disappointed in missing the Statement of Corporate Intent (SCI) targets.
“We have estimated that the combination of damage from severe weather events, the drought negatively affecting the milk season, threatened industrial action against Interislander, and the reduction in Solid Energy’s coal volumes combined with their unsustainable contract prices, reduced our surplus result by at least $20 million.”
“As a result, while revenue was only 1% below our SCI target, our operating surplus was 9% below the $119 million target.
On December 31 a restructure of the company was implemented that resulted in the assets and liabilities of the New Zealand Railway Corporation being transferred to KiwiRail Holdings Limited, a new state owned enterprise.
“This decision was made so that the company is valued on a commercial basis as our assets need to reflect their productive value,” says Spencer.
According to chief executive, Jim Quinn, the business has continued to grow while maintaining its improvement programmes over the past year and he expects this momentum to continue.
“The freight business is gaining more customers and has continued to increase tonnages from the import export, forestry and domestic sectors,” he says.
“But the last quarter was disappointing due to the combined effects of the Fonterra botulism scare, disruptions due to severe weather and ongoing reductions in bulk freight due to Solid Energy’s issues.”
“Looking forward there has been an increase in domestic freight and we expect this to continue as we head into the peak season. There has also been a very positive start to the dairy season after the mild winter which will boost the import export tonnages.”
