By NZPA
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Monday 8th July 2002 |
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The shares fell as much as 20 cents to $2.55 -- their lowest point since the rail operator was privatised in 1993. They last traded down 19 cents at $2.56, against a year high of $4.30.
Tranz Rail, which is in the process of transforming into a long distance cargo operator, warned on Friday its fourth quarter result would be hit by substantial writedowns related to the sale of its passenger network and the contracting of its engineering work.
Sales from freighting forestry products have also fallen, while other costs have increased, the company said in a statement after the market closed.
The statement was made in response to a query from the Stock Exchange about Tranz Rail's sharp drop in share price since June 20. The stock has lost as much as 66 cents, or 21 percent, since then.
Tranz Rail said on Friday it will make an announcement regarding its expectations for the 2002/03 year within the next month.
In May, Tranz Rail posted a net after-tax profit of $2.8 million for the three months ending March 31, weakened from the $13.1 million profit recorded a year earlier by restructuring costs, and signalled further writedowns would follow. Earlier this year the rail operator's outlook was downgraded by credit rating agency Moody's from stable to negative, due to a weaker operating environment and a disappointing interim profit.
Moody's said the next 12 to 18 months would be critical for the company as it sought to lift its profitability.
Tranz Rail's share register is dominated by institutions after Swiss-based merchant bankers Sir Michael Fay and David Richwhite and US-based Wisconsin Central Transportation sold their respective 15 and 24 percent stakes at $3.60/share and $3.70/share in February.
Grant Williamson, of Hamilton Hindin and Greene, said Tranz Rail was likely to try and bring its balance sheet more in line with "true value".
The company has attracted criticism in the past for the way it treats spending on its track network.
Critics say it has inflated the value of the network by more than $300 million since 1993 and the treatment has enabled it to report higher profits than were actually achieved. Tranz Rail said a month ago it was spending about $50 million a year on track maintenance and about half would be classed as capital spending and the other half as a cost. The company said it capitalised part of the spending because it was preserving a perpetual asset.
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