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Third Quarter and Nine Months Result

Third Quarter and Nine Months Result for the period ended 31 March 2003

Auckland, New Zealand - Tranz Rail Holdings Limited [NZSE: TRH] today reported its financial result for the third quarter and nine months to 31 March 2003.

Third quarter financial performance fell short of the company's previous expectations and was consistent with the advice it provided to the market on 7 April 2003.

The company's year-to-date operating profit from trading was $30.3 million, $6.5 million below its forecast of $36.8 million.

Third Quarter Trading

Third quarter performance was largely affected by the impact of climatic conditions and an associated downturn in the rural and commodity sectors.

Revenue for the quarter of $157.2 million is $11.3 million below forecast of $168.5 million. This fall in revenue has impacted the operating profit from trading, which at $19.1 million is $10.2 million below the forecast of $29.3 million. The operating profit was $4.7 million ahead of the corresponding period last year.

* Rail Services Group revenue was impacted by the effects of the recent drought conditions on milk production and fertiliser, the Kinleith strike, and lower coal volumes due to service issues related to the Otira tunnel. In addition, improvements in equipment utilisation by Distribution Services Group have resulted in lower internal revenue.

* The Interisland Line has been affected by increased competition for passengers on the Cook Strait. * Distribution Services Group continues to trade in line with forecast. * Rail Passenger Group has been affected by reduced passenger volumes and reduced subsidies as a result of the January heat buckling issues. Year-to-date trading

Overall rail freight volumes and revenues are ahead of last year. Operating efficiency initiatives are reflected in improved ontime performance and locomotive reliability together with reductions in cargo handling errors, track speed restrictions, and time lost due to workplace accidents. Outlook

We have made progress but are aware that we do need to make greater gains in the future. The changes we have achieved over the past year mean we now have a sound and strong foundation to achieve those gains. ef=

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