KiwiRail looking ahead after challenging year
30 October 2014 4:04PM
KiwiRail today acknowledged the 2013/14 financial year had been a challenging one but continued growth in some key markets illustrated the continued relevance of rail in the New Zealand transport sector.
At its annual public meeting today KiwiRail reported a flat revenue year however some sectors continued to perform well. For example six percent growth in the domestic freight market was realised during the year. The issues with the Aratere saw the Interislander passenger revenue down by around nine per cent. KiwiRail recovered some of that loss with increased revenue of almost two per cent from commercial vehicle freight on its ferries. Tranz Metro and KiwiRail Scenic Journeys operations both performed well.
While overall revenue was held at $724m, KiwiRail Chairman John Spencer says that the annual results were particularly disappointing considering the year had started off so well with the freight business on target to exceed its revenue and profit targets for the year. “By the end of October we were up 4 per cent on the same time in 2013,” he said.
“With a slowdown in export logging and dairy volumes, prices fell on the international market which meant a drop in our operating surplus of over 28% from 2013 to $77.5m.”
“Two events during the 2014 financial year rank among the tougher tests we have faced because their effect on our earnings and on our reputation with our customers. The events in question were a propeller shaft failure on the Interislander ferry Aratere and the identification of asbestos contamination in our new DL locomotives,” he said.
2014 was frustrating for KiwiRail, our customers and our shareholders but we are determined to recover and continue our growth programme says Mr Spencer.
KiwiRail Chief Executive Officer Peter Reidy said that the landscape is changing and KiwiRail has a key role to operate and optimise the transport rail system to enable export, domestic and passenger patronage growth.
“With high fixed costs, maximising return on our investments means our rolling stock needs to be operating at full capacity with minimum disruption,” says Mr Reidy.
“Looking forward our focus will be on improving asset and labour productivity, developing process efficiencies and delivering consistent on time performance for our customers and the Crown’s substantial investment is improving the quality of rail infrastructure.
“For the first time in 35 years we have invested in 40 new locomotives. One locomotive can move the same freight as 100 trucks and that’s a lot of congestion off our motorways and many tonnes fewer of carbon emissions. This investment in new stock enables us to better meet the demands of our customers.”
Mr Reidy says that KiwiRail has delivered business improvements in several areas.
“Our total harm injuries have reduced by 44 per cent from the previous year. Our passenger numbers, reliability and punctuality in our Tranz Metro business have all increased, and we have made good progress in our programme of seismic assessments for our buildings, although remediation work during the year impacted our costs.
“Without doubt, rail has a significant contribution to make to the country’s economy, a view that is supported by the latest National Freight Demand Study and we are reviewing our operations to ensure we are in a strong position to meet predicted growth,” says Mr Reidy.
KiwiRail’s financial results for the twelve months ended 30 June 2014 have been released in accordance with the company’s continuous disclosure policy - consistent with the Government’s Continuous Disclosure Rules for State Owned Enterprises which came into effect from 1 January 2010.
KiwiRail’s full year accounts were tabled in Parliament on 30 October 2014.
Issued by KiwiRail