Costs continue to haunt Tranz Rail

In the three months ended March the country's rail operator earned $171 million, up 10% on last year, but net profit fell to $13.1 million (10 cents per share) from $17.5 million (14 cents per share) previously.

Freight tonnage fell 1% and revenue tonne kilometres fell 3% but thanks to the rate increase freight revenue jumped 9% to $119 million.

Tranz Rail's passenger revenue rose 19% to $48.1 million, mainly due to higher passenger numbers on interisland ferries, although passengers on rail services also increased during the period.

Passenger revenues also improved because of higher passenger fares, implemented during the second quarter in response to higher fuel costs.

Increased operating costs continued to dog the company during the third quarter, increasing 17% over the previous period to $152.7 million.

Average prices for rail diesel rose 34% and light fuel rose 16% compared with the previous year, and the company also faced higher labour costs, increased costs of imported materials, operational incidents and costs associated with shifting the company's head office from Wellington to Auckland.

Chief financial officer, Mark Bloomer, says the increased costs have outweighed the pleasing achievements on the revenue side and as a result the net result is disappointing.

The latest figures put Tranz Rail's net profit for the nine month's of the year to date at $6.4 million or 5 cents per share, well down on last year's result of $38.5 million or 31 cents per share.

Total revenue for the nine-month period is up $22 million to $477 million.

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