KiwiRail announces Half Yearly result

02 March 2015 1:01PM

For the six months to 31 December 2014, KiwiRail is reporting total revenue earnings of $366.6 million.  This was an increase of $1.1 million over the comparable period in 2013, despite a challenging market environment, particularly in bulk freight.

For the six months to 31 December 2014, KiwiRail is reporting total revenue earnings of $366.6 million.  This was an increase of $1.1 million over the comparable period in 2013, despite a challenging market environment, particularly in bulk freight.

The company’s EBITDA profit for the first six months of the 2014/15 financial year was $35.1 million - $2.2 million less than the 2013 figure.

KiwiRail Chairman John Spencer said the period presented some challenges for KiwiRail, particularly in the Bulk Freight (primarily coal and milk) and Forestry segments, with global pricing for coal, timber and dairy products all being at low points of the economic cycle, compared to the same period in the previous year.   “Bulk Freight was significantly affected by lower volumes of coal being transported in the South Island and the hot dry summer which impacted on primary production,” he said.

“Domestic Freight revenue, however, increased on the back of the domestic economy and ongoing migration of road volumes to rail, with growth continuing to come from our partnerships with NZ freight forwarders in the development of intermodal hubbing points.”

Mr Spencer said KiwiRail’s primary goal in the first half of the 2014/15 financial year had been to consolidate the business and restore confidence in the company after a testing previous 12 months, which included disruptions to the company’s Interislander operations and asbestos issues with new locomotives out of China.

A major focus for KiwiRail during the half-year was the company’s health and safety performance with Total Recordable Injuries reducing by 51% on a rolling 12 month basis.

The half-year was also significant for the growth initiatives being undertaken and moves by KiwiRail to simplify operations and deliver a cost-effective end-to-end supply chain network model for our customers.

Mr Spencer said the announcement by Kotahi, Maersk and Port of Tauranga of their intentions to establish supply chain arrangements that will facilitate larger ships calling to NZ was also a positive development for KiwiRail.  “We are ideally placed to move large volumes of freight to and from NZ ports and this development will improve our asset utilisation and reduce wastage from our supply chain network.”

Mr Spencer said KiwiRail’s other operations outside the Freight area had also performed well over the first six months of the 2014/15 year: • Interislander, benefiting from full availability of all three ships, increased revenue by 8.5 per cent over the comparable period in 2013 and also achieved a very strong operating performance through the peak summer sailing period, achieving 99 per cent of sailing against advertised schedules during that time. • Property Leasing and Development had a strong result, recording $2.7 million revenue growth over the same period in 2013. • Scenic Journeys recorded a revenue increase of $1.9 million, with all three tourist-oriented services - Northern Explorer, Coastal Express and TranzAlpine – benefiting from both increased patronage and higher yields.

Mr Spencer said KiwiRail made significant progress in simplifying the business through asset standardisation in ordering eight new locomotives, 100 freight wagons and 100 intermodal curtainside containers that will be delivered during 2015. The decision was also made to replace the Arahura ferry which will be retired in mid-2015.

Infrastructure and Engineering highlights during the half-year included a progressive reduction in train speed restrictions through track improvements and the centralisation of signal systems at Te Rapa, Mission Bush and Mount Maunganui, while there was also significant progress on KiwiRail’s bridge upgrade programme and the successful on-time completion of the large programme Block of Line (BOL) maintenance and renewal works across the country.

During the half-year, KiwiRail reorganised its business around a new functional leadership structure to support the company’s end-to-end supply chain delivery model making a number of new appointment to the Executive Team.

Forecast

KiwiRail expected revenue to continue to be patchy across the commodity markets, particularly coal and bulk milk, into the second half year, Mr Spencer said.  However he expected this to be mitigated to a degree by continuing good performance from the Interislander, domestic freight and Scenic Journeys rail patronage.

“We will be looking for some upside in the second half-year from our import/export bulk customers  and continued investment by domestic freight forwarders as we complete our consolidation and recovery year.  We are also addressing various elements of our cost base and focusing on delivering property-related opportunities over the next five months to deliver our forecast EBITDA range of $90 million - $95 million.”

Performance summary

 

Performance Summary

UNAUDITED

UNAUDITED

 

 

31 December 2014 ($m)

31 December 2013 ($m)

Variance

$m

External Revenue

366.6

365.5

1.1

Operating Profit

35.1

37.3

(2.2)

 

 

 

ENDS

 

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