KiwiRail Holds Revenue Line And Builds Foundation For Growth
KiwiRail's result for the half year to December 2019 reflects a solid performance despite a challenging business environment.
KiwiRail Group Chief Executive Greg Miller says: "Our reported revenue for the half year was $333.6 million, up $4.8 million on HY19. Excluding the impact of fuel cost recoveries, our underlying revenues grew by $8.2 million or 3 per cent for this period.
"We are pleased we have held the revenue line in a difficult environment that included an economic downturn in multiple markets, along with natural events that damaged the network. Despite these challenges, we saw our import/export business grow by 5 per cent compared to the previous half year.
Our operating surplus was $26.9 million. This result reflects the positive impact from a change in accounting treatment of leases, which was offset by the impact of the softer freight volumes and passenger numbers and the unexpected eight-week line closure at Omoto due to slips. In addition, as our operational and project related activity has increased, we have increased our front-line labour resource to ensure we can continue to operate and maintain our network safely and effectively.
Looking ahead, we expect market challenges to continue into the second half of year. KiwiRail will be affected, as are other New Zealand transport, import and producer companies, by the effects of Coronavirus.
KiwiRail is in a transitional phase that will allow it to play a critical part in an integrated transport system that will deliver long term benefits for New Zealand," Mr Miller says.
"We're making good progress, but we are still dealing with the results of many years of underinvestment that has limited our ability to continue to provide the services our customers need, and to realise the full potential and value of rail.
This is a watershed year for KiwiRail, as we start the transformation of our business. The Government has made a huge commitment to rail, and the investment that is being made in our network and in our rolling stock will position us well to meet the current and future demand of our customers.
We aim to keep a strong commercial focus for KiwiRail, while also focusing on the added benefits rail brings by reducing heavy commercial vehicle wear and tear on roads, sustaining freight transport that reduces emissions by 66 per cent compared to road transport, and reducing congestion on roads.
Meanwhile, safety remains a priority.
Our commitment to safety is seen in the 121 per cent increase in the number of safe work conversations held across our team. And our latest figures show that last year had the lowest number of collisions between vehicles and trains on record, with 12 collisions in 2019 compared to 25 in 2018."
Highlights for the half year include:
* First half regional rail investment through the Provincial Growth Fund (PGF). This includes the $94.8 million announced in September 2019 to provide much-needed maintenance work and remedial work to the Northland line (the additional $109.7 million package was announced at the start of the second half year)
* Launching the design for a new Palmerston North road-rail freight hub with $40 million PGF funding
* Kaiarahi ferry purchased in November and re-flagged in New Zealand
* Appointment of naval architects and ship brokers to facilitate the design and supply of new ferries to ensure continuity of interisland connectivity in New Zealand - $35 million Budget funding
* Launch of work on double tracking of the Hutt Valley line between Trentham and Upper Hutt, to increase capacity on the line
* One of our biggest Christmas work blitzes in Wellington, making large strides towards completing a major upgrade of the metro network
* Arrival of the first 450 wagons as part of our rolling stock replacement project
* PGF funding announced for the revitalisation of the Hillside workshops, $20 million to upgrade and create new facilities
$333.6 million revenue up $4.8 million on prior year
* Growth in import/export freight of 5% on HY19 with increased volumes across three main ports
* Net deficit after tax of $(33.7) million improved by $70.9 million from $(104.6) million in the prior year with an increase in grant revenue for capital works and a decrease in Kaikoura earthquake related asset impairment
InterIslander reached impressive satisfaction levels at 91%,
alongside a record 61 net promoter score
* Rail safety week ran from 12 August 2019, with the theme of "near miss" memorials. The safety campaign generated more than 1.5 million views of the safety video, alongside over 630,000 people reached on social media platforms
* The Kaikoura rebuild of the line damaged in the 2016 earthquake won the American Railway Engineering and Maintenance-of-Way Association's annual WW Hay Award for Excellence, the first time the award has been given to an organisation outside North America
* KiwiRail and its project partners in the North Canterbury Transport Infrastructure Recovery alliance also won the top New Zealand engineering honour, taking out the Supreme Award at the Engineering NZ ENVI Awards
* KiwiRail's graduate programme was judged the best by the New Zealand Association of Graduate Employers