A lift in KiwiRail’s half-year result reflects a return to full service of its Interislander and Great Journeys New Zealand scenic passenger operations, and the lessening impact of Covid-19.
KiwiRail Holdings Limited, which owns and operates New Zealand’s rail network and the Interislander Cook Strait ferries, today announced a Group operating surplus of $81.6m for the six months ended 31 December 2022 (HY23), an increase of 25.7 per cent on the same period last year.
The $81.6m reflects KiwiRail’s ‘above rail’ commercial operations, with the ‘below rail’ or network component of the railway fully funded through the National Land Transport Fund (NLTF), supported by the Crown and track-user charges from the market.
Achieving this surplus, which is committed to future core capital reinvestment, is a step along the way to KiwiRail’s above rail business becoming self-sustaining.
HY23 operating revenue for the ‘above rail’ business was $398.2m, up 25 per cent ($80.8m) on HY22.
The return of Kaiarahi to the Cook Strait run after an extended absence due to a major gearbox failure, along with the arrival of international passengers helped lift Interislander revenue to $62.3m, up 31 per cent ($15m) on HY22. The impact of the re-opening of the borders was also seen in the $7.5m rise in scenic revenue (excluding commuter) to $9.3m, as all three scenic services were resumed following a short period of hibernation in HY22. The IMEX (import/export) freight sector also recorded good growth, up 6 per cent ($4.9m) on HY22 to $84.3m.
Below rail operating expenses (funded primarily through the NLTF and recoveries from Auckland and Wellington metros) for HY23 were $99.0m. The expenses represent the cost of maintaining, operating and managing the 3,700km rail network, including the Auckland and Wellington metro areas.
KiwiRail Chair David McLean says the result is an encouraging one, given the challenges of recent years, and provides a platform for the growth KiwiRail will need to become self-sustaining.
“HY23 saw an increased emphasis on safety,” he says. “As we build a more resilient network and pursue growth, we will retain a steely focus on our ‘Care and protect’ value, and the safety and wellbeing of our people, the public and the environment.
“We are in the midst of a major capital investment programme and business transformation. The Government has committed $8.6 billion for capital projects through to 2030.
“That investment is designed to restore a resilient and reliable railway, one that allows KiwiRail to build stronger connections for a better New Zealand as part of an integrated transport system.
“Rail currently carries about 13 per cent of the country’s freight task. That needs to grow to support New Zealand’s supply chain and cut the country’s transport emissions. The way to do that is for KiwiRail to improve its service reliability, and that means updating our assets and improving our network.
“During HY23 we carried just over two billion net tonne kilometres of freight. This meant 142,897 fewer tonnes of CO2 emissions than if that same freight had been moved by truck, 53.1m litres of fuel savings and less wear and tear on the roads.
“The future for KiwiRail is a bright one,” says Mr McLean, “and recent appointments to our Board will help position us to deliver on the significant opportunity that lies ahead.”
Chief Executive Peter Reidy says substantial progress is being made with KiwiRail’s capital investment programme.
“The iReX programme - which will see the arrival of two new purpose-built rail-capable ferries beginning in 2025, along with the new terminals to serve them - is well underway.
“In HY23 we began the Papakura to Pukekohe electrification to improve the Auckland commuter network.
“We also signed the contract for a once-in-a-generation upgrade to our train control system which will provide greater automation and resilience across the entire network, and continued work on the Wiri to Quay Park Third Main project.
“Work also continued on improvements to the Wellington network, including upgraded tracks for the Wairarapa and Capital Connection lines, along with refurbishment of Capital Connection carriages.
“We are also continuing the upgrade of the North Auckland Line.”
“At the beginning of our third quarter (in January and February this year), New Zealand has been impacted by a number of severe weather events. Communities across Northland, Auckland, Hawke’s Bay and further afield have suffered significant flooding and cyclone damage, and these events have also impacted our network in northern and eastern parts of the North Island. Our teams are working hard to restore services for customers, although some of the damage is considerable and we expect some impact to revenues in the second half of our financial year.
“We also experienced disruption to our Interislander services and are working closely with Maritime New Zealand to safely return to schedule and minimise ongoing disruption for passengers and freight customers.
“We have bold plans for the future, and all our plans are underpinned by an unwavering commitment to safety - which I am making a personal priority, and a focus for the business.
“Our injury frequency rate has reduced by 15 per cent on a rolling 12-month basis, which is positive.
“Driven by our ‘Care and protect’ value, we are leading with a large reset on our safety leadership journey to build a belief across our teams that all accidents are preventable. To identify focus areas, we are benchmarking our safety leadership practice, systems and processes against global best practice.
“Our top priority must be the safety of our people, our customers and the public. Without that, any other achievement is empty.”
 Operating surplus represents earnings before depreciation & amortisation, interest, impairment, capital grants and fair value changes.
Our Half Year report can be found here: