KiwiRail posts improved financial result
20 February 2019 9:09AM
KiwiRail has posted improved revenue for the half year to December 2018 with overall revenue 12% up on the previous year.
Good progress in domestic freight (30%), forestry (15%) and bulk freight (8%) revenue to December was bolstered by an 8% increase in tourism revenue on the Great Journeys of New Zealand rail and ferry services.
The operating surplus of $16.3 million was 7% up on the previous year.
“We are shaking off the impacts of the 2016 Kaikoura earthquake,” KiwiRail Chairman Greg Miller says. “It will take some time to get back to where we were before the Main North Line was closed following the quake but we are seeing increased demand in this result.
“KiwiRail has overcome enormous challenges in the past two years and there are still increased cost pressures resulting from increased regulation, compliance and committing to future investments that will pay back in the long term.
“What this result highlights, however, is that we are ready to embrace growth and invest in our next phase of development.”
Highlights from the half year to December include:
- Group revenue increased by more than $36 million to $328.8 million with an operating surplus 7% ahead of the previous year at $16.3 million.
- Domestic freight up 30% following the full reopening of the Main North Line for freight
- Forestry up 15% as the Wall of Wood comes on stream and KiwiRail increases its log wagon fleet
- Bulk freight up 8% despite a shortened milk season and on the back of strong coal and export markets
- Tourism up 8% on train and ferry services. Interislander ferries had their best December ever with fare revenue 13% ahead of pre-earthquake levels
- The return of the Coastal Pacific scenic train from December 1 with strong bookings throughout the summer
“We are a confident organisation that has its highest levels of staff engagement, strong relationships with our union partners and a supportive shareholder in a Government which has recognised the role rail plays in a sustainable and inclusive economy,” Mr Miller says.
“The more freight we get onto rail, the fewer trucks we have on New Zealand roads which increases safety for everyone, reduces carbon emissions and means less road maintenance for taxpayers.
“This year we will see the reopening of the Napier to Wairoa line for forestry wagons, more work on preparing for a spur line to Marsden Point in Northland, work on additional capacity for our tourism trains and our first premium carriages, all made possible by the Provincial Growth Fund.
“We are also preparing for our second long-distance commuter service, the Hamilton to Auckland train, and buying two new rail-enabled ferries for the Cook Strait adding capacity and speed for our customers.
“KiwiRail is dealing with a legacy of underinvestment from successive governments and our infrastructure still requires a lot of work to bring it up to a modern transport standard so we can really deliver what we are being asked to deliver.
“The Government has seen we are in catch-up mode and is willing to invest for the good of New Zealand.”
KiwiRail Acting Chief Executive Todd Moyle says the organisation’s focus on staff development, engineering excellence and commitment to safety has seen it through a tough couple of years to re-emerge stronger than ever.
“This result shows the green-shoots of growth across all of our tourism and freight businesses which requires our teams to really focus on performance delivery for our customers.
“We have restructured our operations, network services and rolling stock teams to ensure greater alignment and efficiency.
“That has seen improvements in network reliability, a plan to rejuvenate our aged locomotive and wagon fleets and a commitment to further improve our on-time performance and efficiency.
“What hasn’t changed is the unrelenting focus on safety, and we’ve introduced a new safety culture survey to ensure our belief that every incident is preventable is felt in every site and workplace. That has also meant a 33% increase in safe work conversations.
“Other highlights from this period include the Kaikoura rebuild winning the Institution of Civil Engineers People’s Choice Award – global recognition of New Zealand’s engineering expertise under the most trying circumstances.
“A customer focus across the organisation also saw Interislander reach its highest satisfaction levels, hit 94% on-time performance and win the Overall Customer Experience award at a Direct Ferries ceremony in London.”
Mr Moyle says the strong half year result will spur KiwiRail on in what is an exciting year ahead for rail.
“New Zealanders are increasingly seeing the benefits rail delivers in our cities, in growing regional economies and in making our roads safer.
“Our purpose is to deliver stronger connections for a better New Zealand and that drives our teams every day to improve their performance,” Mr Moyle says.
“KiwiRail also has the ability to improve the wellbeing of communities through intergenerational investment in a fast-changing transport sector. We take that responsibility very seriously.”