KiwiRail 1H operating earnings rise 7.6 percent on freight, FY result to miss SCI

Thursday 28th February 2013

KiwiRail, the state-owned railway company, posted a 7.6 percent gain in first half operating earnings as it benefited from a pickup in freight revenue and a continued drive to cut costs.

The operating surplus was $46.9 million in the six months ended Dec. 31, from $42.6 million a year earlier, the Wellington-based company said in a statement. Operating revenue rose 4 percent to $362.9 million while operating expenses dropped 3.5 percent to $316 million.

An impairment of $189.9 million, relating to the restructuring of the company, resulted in a net loss of $75.9 million from a loss of $45.7 million a year earlier. KiwiRail isn't paying a dividend to the government.

Freight revenue rose 7.8 percent to $238.5 million in the first half. That was driven by a 21 percent jump in revenue from its import-export business. Bulk freight rose 1.3 percent, reflecting lower coal and bulk milk volumes while the domestic freight business eked out growth of 0.6 percent, which the company attributed to a flat domestic economy.

Revenue from the Interislander fell 1.4 percent to $56.3 million and for Trans Metro the decline was 7.6 percent to $21.9 million. Tranz Scenic revenue fell 6.1 percent to $9.3 million and Infrastructure declined 2.3 percent to $21 million.

Revenue from property and corporate functions rose 2.6 percent to $15.9 million.

KiwiRail forecast a full-year operating surplus of $104 million to $107 million, missing the $119 million target in its statement of corporate intent.

"The balance of the year presents some challenges," the company said. Solid Energy's financial difficulties may result in "significantly less coal" being moved from its West Coast mines and meaning KiwiRail is unlikely to conclude pricing negotiations.

Bulk milk volumes are likely to be below expectations on signs the dairy season will end sooner than forecast. The continued flat outlook for the economy and tepid Cook Strait passenger growth would also weigh on earnings, it said.

BusinessDesk.co.nz

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