Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


KiwiRail's operatings earnings improve despite lower freight

KiwiRail's operatings earnings improve despite lower freight

By Pattrick Smellie

Aug. 28 (BusinessDesk) - KiwiRail had a much better 12 months to June 30 than a year earlier, improving its earnings before interest, tax,depreciation and asset impairments to $91 million, 17 percent ahead of the previous financial year, which was marred by several one-off costs.

The result was achieved on total revenues of $721 million, down 3 percent for the year, with freight revenues falling 6 percent to $434 million in an environment where coal deliveries by Solid Energy fell, offset somewhat by higher levels of dairy production.

The forestry, import/export and domestic freight categories together performed slightly ahead of last year.

For the year ahead, chief executive Peter Reidy told BusinessDesk the state-owned rail business expected "volatile trading conditions', with Solid Energy recently placed into voluntary administration and a sharp downturn in dairy prices expected to lead a reduction in milk solids production in the current season.

In its favour, KiwiRail had profitable contracts with port customers and it was enjoying lower fuel costs, with diesel prices falling steeply and initiatives to save substantial amounts of fuel by operating trains more efficiently.

As expected, after depreciation and writedowns on the value of the rail network that KiwiRail also owns, the state-owned enterprise reported a net loss for the year of $167 million, a 33 percent improvement on last year's loss.

KiwiRail is locked in negotiations with the government ministers and the Treasury on initiatives to establish the national value of its operations, since it cannot be expected to make a profit in the long term because there is too little freight in New Zealand to fully cover the cost of the 4,000 kilometre national network of tracks.

"As the rail network does not generate sufficient cashflows to cover the level of required investment, a large proportion of the accounting value must be written off each year," said Reidy, who described the business as permanently hampered by having "not enough freight, too many assets".

"We will rely on Crown support for the foreseeable future."

Passenger services performed well, with inter-island ferry revenues rising 9 percent to $127 million, while KiwiRail's three "Scenic Journey" trains pulled in $25 million, an 18 percent increase reflecting strong growth in tourism numbers. Operating expenses were 5 percent lower, said Reidy. Full financial accounts for the financial year were not immediately available.

KiwiRail is also seeking better returns from its extensive holdings of land and buildings and the property segment of the business saw revenue rise 20 percent to $43 million. Planning is underway to sell non-core assets, including possibly the Wellington central railway station building, although KiwiRail might lease back as much space as it needed, said Reidy.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Energy Resources Aotearoa: New Law On Decommissioning Could Be Costly Overkill
A new law on decommissioning oil and gas fields passed by Parliament today has good intentions but is overkill, according to Energy Resources Aotearoa. "We strongly support operators taking responsibility and paying the costs for decommissioning, which is what all good operators do," says chief executive John Carnegie... More>>

Commerce Commission: News Publishers’ Association Seeks Authorisation To Engage In Collective Bargaining

News Publishers’ Association of New Zealand Incorporated seeks authorisation and provisional authorisation to engage in collective bargaining with Facebook and Google. The Commerce Commission has received applications from News Publishers’ Association of New Zealand Incorporated (NPA) seeking authorisation and provisional authorisation on behalf of itself... More>>

Reserve Bank: MPC Continues To Reduce Monetary Stimulus
The Monetary Policy Committee agreed to raise the Official Cash Rate (OCR) to 0.75 per cent. The Committee agreed it remains appropriate to continue reducing monetary stimulus so as to maintain price stability and support maximum sustainable employment... More>>

PriceSpy: Producer Prices Increase
New Black Friday and Covid-19 Report* released by PriceSpy says people’s fear of stepping inside physical shops during big sales events like Black Friday has risen since last year; Kiwis are still planning to shop, but more than ever will do it online this year... More>>

NZ Skeptics Society: Announce Their 2021 Awards, And Dr Simon Thornley Wins The Bent Spoon

Every year the New Zealand Skeptics presents its awards to people and organisations who have impressed us or dismayed us, and this year it’s been hard to pick our winners because there have been so many choices!.. More>>

REINZ: Sales Volumes Leveling Out

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 44 fewer lifestyle property sales (-2.6%) for the three months ended October 2021 than for the three months ended September 2021... More>>

BNZ: Auckland Retail Card Spending Bounces Back In Step Two
Bank of New Zealand (BNZ) card spending data released today shows one week of retail therapy at Alert Level 3 Step 2 has been enough to raise card spending in Auckland to levels greater than before the Delta lockdown... More>>