Tranz Rail Trading Update

Auckland,New Zealand - Tranz Rail Holdings Limited {NZSE:TRH} Tranz Rail has issued a trading update on its financial result for the financial year ending 30 June 2003.

The Company's operating profit is below expectations. Current estimates indicate an operating profit of $40.0 million for the 2003 financial year.

A number of factors have lead to a lower than expected result. These include:

* soft trading results compared to the earlier forecast during May and June, particularly in Rail Services Group;

* a change in the accounting treatment of "Box" company sales previously included in forecast revenue ($3.1m), but which will be spread over future financial years reflecting the substance of the transactions;

* additional expenses incurred in connection with various asset sales.

After foreign exchange gains on the Aratere lease ($12 million) and a tax credit ($4.5 million), the Company expects to record a net profit after tax in excess of $30 million, slightly ahead of that released on 7 April 2003.

In addition, the Board has considered a preliminary budget for the 2004 financial year, which records an operating profit of $48.0 million. This replaces all existing forecasts and estimates previously issued by the Company beyond the 2003 financial year.