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Tranz Rail On Target with First Quarter Result

MEDIA RELEASE 21 October 2002

Tranz Rail On Target with First Quarter Result

Tranz Rail Holdings Limited today announced an operating loss of $7.2 million for the three months to 30 September 2002, in line with its July 23 forecast operating loss of $7.3 million.

The first quarter is typically the company's least profitable period when lower volumes of freight are carried. Managing Director Michael Beard said the company remained confident of achieving its operation performance targets for the balance of the year.

Mr Beard said total revenue for the first quarter was $137.8 million, exactly in line with the forecast.

Bulk freight revenue of $32.2 million exceeded the forecast by $1.4 million. Forestry was the standout performer, $2.5 million ahead of forecast on the back of stronger export demand for logs.

Operating costs of $145 million were also in line with the forecast. The cost of purchased services was $1.6 million higher than forecast, largely reflecting a change in the maintenance work scheduled on the rolling stock fleet. This work was aimed at improving the reliability of the fleet, in keeping with Tranz Rail's determination to meet service expectations. Additionally, costs have been incurred in connection with the extension and refinancing of the Company's banking facilities. Casualties and insurance costs were $1.5 million greater than forecast due to the derailment at Te Wera in July, and costs arising from wash outs and other weather related incidents. These higher costs were offset by savings compared to forecast in fuel and labour expenses.

This is the first time that Tranz Rail has reported financial performance against its forecasts. Mr Beard said the company was committed to providing a high level of financial information to enable the markets to more fully understand the business.

"Over the past two years, we have transformed Tranz Rail's operations. This change prepares the company to capture new freight business through greater efficiencies and new services," Mr Beard said.

"Our focus is now firmly on performance, ensuring that our services meet customers' expectations.

"Just as we have met financial expectations this period, we have continued to maintain earlier gains in service reliability during the quarter."

Reliability figures for rail freight services were holding at an average 80% on-time departures - a dramatic improvement on the 55% average reliability recorded in the same period last year.

The company's bottom line loss for the quarter was $14.2 million, compared with a forecast $13.3 million.

Mr Beard said an $800,000 increase in financing costs related to increased bank interest and an adjustment in the method of accounting for the Aratere lease costs.


Interim Statement of Financial Performance

Quarter ended 30 September 2002 (unaudited)

:::Actual $m::::::Forecast $m::::::Variance $m::::::Variance %:::
Revenue:::::::::::::::::::::::::
Freight revenue:::::::::::::::::::::::::
Bulk (1):::32.2::::::30.8::::::1.4:::%:::4.5:::
Intermodal (2):::60.0::::::63.6::::::(3.6)::::::5.7:::
Other:::13.6::::::13.0::::::0.6::::::4.6:::
:::105.8::::::107.4::::::(1.6)::::::(1.5):::
Passenger revenue:::25.2::::::24.1::::::1.1::::::4.6:::
Other revenue:::6.8::::::6.3::::::0.5::::::0.8:::
Total revenue:::137.8::::::137.8::::::-::::::-:::
::::::::::::::::::::::::
Operating costs:::::::::::::::::::::::::
Labour and related costs:::41.3::::::42.8::::::1.5::::::3.5:::
Materials and supplies:::3.1::::::3.2::::::0.1::::::3.1:::
Purchased services:::28.8::::::27.2::::::(1.6)::::::(5.9):::
Lease and rental costs:::18.3::::::18.3::::::-::::::-:::
Contractor costs:::15.3::::::15.0::::::(0.3)::::::(2.0):::
Fuel and traction electricity:::12.5::::::13.9::::::1.4::::::10.1:::
Depreciation:::12.3::::::12.8::::::0.5::::::3.9:::
Casualties and insurance:::3.6::::::2.3::::::(1.3)::::::(56.5):::
Other expenses:::9.8::::::9.6::::::(0.2)::::::(2.1):::
Total operating costs:::145.0::::::145.1::::::0.1::::::-:::
::::::::::::::::::::::::
OPERATING LOSS:::(7.2)::::::(7.3)::::::0.1::::::1.4:::
::::::::::::::::::::::::
Net interest expense and financing cost amortisation::: (6.8):::::: (6.0)::::::
(0.8):::::: (13.3):::
Net loss before taxation:::(14.0)::::::(13.3)::::::(0.7)::::::5.3:::
Taxation expense:::-::::::-::::::-::::::-:::
Equity accounted earnings of associates::: (0.2):::::: -:::::: (0.2):::::: -:::
Net loss after tax:::(14.2)::::::(13.3)::::::(0.9)::::::(6.8):::
::::::::::::::::::::::::
::::::::::::::::::::::::
(1) Bulk revenue comprises:::::::::::::::::::::::::
Forestry:::12.8::::::10.3::::::2.5::::::24.3:::
Coal:::10.2::::::10.6::::::(0.4)::::::(3.8):::
Milk:::2.7::::::2.6::::::0.1::::::3.8:::
Other:::6.5::::::7.3::::::(0.8)::::::(11.0):::
Total Bulk revenue:::32.2::::::30.8::::::1.4::::::4.5:::
::::::::::::::::::::::::

:::Actual $m::::::Forecast $m::::::Variance $m::::::Variance %:::
(2) Intermodal revenue comprises:::::::::::::::::::::::::
Kombi:::37.8::::::38.0::::::(0.2)::::::(0.5):::
Imex:::22.2::::::25.6::::::(3.4)::::::(13.3):::
Total Intermodal revenue:::60.0::::::63.6::::::(3.6)::::::(5.7):::


Rail Services Group
:::Actual $m::::::Forecast $m::::::Variance $m::::::Variance %:::
Revenue:::::::::::::::::::::::::
Freight revenue:::70.7::::::71.7::::::(1.0)::::::(1.4):::
Miscellaneous revenue:::7.1::::::6.8::::::0.3::::::4.4:::
Total revenue:::77.8::::::78.5::::::(0.7)::::::(0.9):::
Terminals:::11.4:::1:::10.8::::::(0.6):::`(:::(5.5):::
Customer service and commercial::: 3.6:::::: 2.9:::::: (0.7):::::: (24.1):::
Locomotives:::10.9::::::10.7::::::(0.2)::::::(1.9):::
Wagons:::4.7::::::4.7::::::-::::::-:::
Rolling stock lease:::5.8::::::5.4::::::(0.4)::::::(7.4):::
Infrastructure and engineering:::14.3::::::12.7::::::(1.6)::::::(12.6):::
Fuel:::7.2::::::8.3::::::1.1::::::13.3:::
Manufacturing:::1.8::::::2.2::::::0.4::::::18.2:::
Other linehaul:::10.9::::::10.5::::::(0.4)::::::(3.8):::
Other costs:::4.3::::::4.9::::::0.6::::::12.2:::
Total costs excluding depreciation::: 74.9:::::: 73.1::: ::: (1.8):::::: (2.5):::
EBITDA:::2.9::::::5.4::::::(2.5)::::::46.3:::
Depreciation:::9.4::::::10.1::::::0.7::::::6.9:::
EBIT:::(6.5)::::::(4.7)::::::(1.8)::::::(38.3):::

Distribution Services Group
:::Actual $m::::::Forecast $m::::::Variance $m::::::Variance %:::
Revenue:::::::::::::::::::::::::
External revenue:::35.9::::::37.5::::::(1.6)::::::(4.3):::
Internal revenue:::4.3::::::3.9:::0:::0.4::::::10.3:::
Total revenue:::40.2::::::41.4::::::(1.2)::::::(2.9):::
Linehaul and transport costs::: 25.8:::::: 25.9:::::: 0.1:::::: 0.4:::
Branch costs:::12.5::::::13.0::::::0.5::::::3.8:::
Indirect costs:::1.5::::::2.3::::::0.8::::::34.8:::
Total costs excluding depreciation::: 39.8:::::: 41.2:::::: 1.4:::::: 3.4:::
EBITDA:::0.4::::::0.2::::::0.2::::::100.0:::
Depreciation:::1.0::::::0.8::::::(0.2)::::::(25.0):::
EBIT:::(0.6)::::::(0.6)::::::-::::::-:::


The Interisland Line
:::Actual $m::::::Forecast $m::::::Variance $m::::::Variance %:::
Revenue:::::::::::::::::::::::::
External revenue:::22.1::::::20.5::::::1.6::::::7.8:::
Internal revenue:::6.9::::::6.8::::::0.1::::::1.5:::
Total revenue:::29.0::::::27.3::::::1.7::::::6.2:::
Labour costs:::7.8::::::7.9::::::0.1::::::1.3:::
Fuel:::3.6::::::3.9::::::0.3::::::7.7:::
Charter costs:::4.5::::::4.7::::::0.2::::::4.3:::
Port costs:::2.6::::::2.6::::::-::::::-:::
Other costs:::8.2::::::7.8::::::(0.4)::::::(5.1):::
Total costs excluding depreciation::: 26.7:::::: 26.9:::::: 0.2:::::: 0.7:::
EBITDA:::2.3::::::0.4::::::1.9::::::475.0:::
Depreciation:::1.5::::::1.6::::::0.1::::::6.3:::
EBIT:::0.8::::::(1.2)::::::2.0::::::166.7:::

Tranz Rail Holdings Limited
Reconciliation for Rolling Stock Lease
:::Actual $m:::
Reported operating loss:::(7.2):::
Notional adjustment for rolling stock lease:::::::
Decrease in lease cost:::5.8:::
Unrealised foreign exchange gain/(loss):::(4.0):::
Increase in depreciation:::(1.5):::
:::(6.9):::

Shares of Tranz Rail Holdings Limited are publicly traded on the New Zealand Stock Exchange under the symbol TRH. The Company's listing on the NASDAQ National Market System under the symbol TNZR was terminated on 31 July 2002. The Company operates the only commercial railroad in New Zealand, offering an integrated network of rail, road, air and sea distribution and logistics management services that provides customers with transport solutions in the Australasian market place and passenger transport in New Zealand. Freight and passenger services utilise 3,900 route kilometres (2,400 route miles) of track, approximately 145 mainline locomotives, 4,300 wagons (freight cars), 15 carriages (passenger railcars), 162 self propelled passenger railcars, 2,750 shipping containers, two roll-on roll-off ferries and one fast ferry between the North and South Islands. The Company holds a 50% equity interest in Tranz Scenic 2001 Limited which operates long distance rail passenger services in New Zealand utilising approximately 24 locomotives, 92 carriages (passenger railcars) and 6 self propelled passenger railcars. The Company also holds a 27% equity interest in Australian Transport Network Limited which operates in Victoria and New South Wales and provides freight services in Tasmania, Australia, utilising 891 route kilometres (555 route miles) of track, approximately 50 locomotives and 700 wagons (freight cars). (http://www.tranzrail.co.nz)

ENDS

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