KiwiRail said its fiscal 2024 results reflect a challenging year in which the state-owned enterprise improved its safety, service reliability and asset availability performance for customers against tough trading conditions and ongoing network outages from challenging weather events.
KiwiRail’s operating surplus for its services business – the “above rail” part of its operations – was $105.6 million, down 33 percent on the previous year due to deteriorating global and domestic freight markets and escalating costs.
The result also reflects one-off major impacts of $25.9 million. Without these one-off impacts, the operating surplus would have been $131.5 million.
Acting Chair Rob Jager says that KiwiRail recorded good growth in forestry revenues (up 11 percent), Interislander passenger (up 15 percent) and Great Journeys New Zealand services (up 41 percent). However, while bulk freight held steady, there were falls in import/export and domestic freight (down 11 percent and 6 percent respectively) in line with the New Zealand trading environment.
Jager said the reduction in domestic and import-export freight was disappointing but not unexpected, with declining volumes across New Zealand impacting road and rail operators.
“KiwiRail was able and willing to move more freight due to our improved asset availability but, too often, it was not there to carry in a year in which consumer confidence fell and New Zealand’s imports shrank,” Jager said.
Extreme weather events that closed rail lines in Hawkes Bay and Northland continued to impact customers in fiscal 24.
The rail network infrastructure earnings before interest, taxes, depreciation, and amortization (EBITDA) below were neutral, which aligns with the previous year.
Jager said the company is repositioning itself in a strong position to harness an economic recovery.
“We have set ourselves an ambitious plan to grow by winning customer loyalty through enhanced customer experiences, better asset availability, improved service reliability and by delivering a lower cost of operations so we can compete for customers in freight and passenger markets,” Jager said.
Jager said KiwiRail is committed to transforming itself to reach financial sustainability in its services business and to being able to fund its own “above rail” capital expenditure.
“We have been listening to our customers,” Chief Executive Peter Reidy said. “We know that we need to continue to work hard at being easier to do business with, improve our service performance and reliability and deliver our service with competitive pricing. I’m confident that by engaging with our union partners, unleashing the talent of our people, and focussing on our plan, we will achieve these goals”.
Fiscal 2024 saw $1.5 billion of capital expenditure across the organization, a record investment in capital programs and upgrade renewals across the 3,700-kilometer rail network.
Reidy said KiwiRail is putting an immense amount of work into preparing Auckland for the start of the City Rail Link, building a network that will support faster, more frequent and more reliable trains for passengers and greater capacity for freight trains.
In January, KiwiRail completed rebuilding the eastern line, which had been closed for nine months, and it is now one of the best-performing parts of the metro network.
KiwiRail officials said the investment in infrastructure is beginning to deliver results for its customers. Work on the metro networks in Wellington and Auckland has been completed, and they are showing improved reliability.
