By Phil Boeyen, ShareChat Business News Editor
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Thursday 7th February 2002 |
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The company has reported a net profit of $43.3 million for the six months ended December, up from the previous year's $6.7 million loss.
The result includes $58.3 million net profit on the sale of the Auckland corridor and $5.8 million on the sale of the Tranz Scenic business. The company says it has recognised only half of the gain on the sale of Tranz Scenic because it has kept a 50% interest in the new holding and operating business.
Net profit also includes a $14.1 million provision to cover redundancies and related costs associated with the outsourcing of some of Tranz Rail's engineering functions.
However while the bottom line was boosted by the asset sales the company's operating profit, adjusted for abnormal items, was $13.7 million compared to the previous year's $17.3 million.
Chief financial officer, Mark Bloomer, says the result reflects the impacts of Tranz Rail's major restructuring programme, announced in October 2000.
"Most of the projects have been completed, or will be concluded in the latter half of this financial year, allowing the company to start the next financial year with a clean slate.
Mr Bloomer says such dramatic change has involved some pain and the company has taken a hard look at some of its freight business to ensure the services are operating profitably.
"This has been particularly so in forestry, where we have rationalised low-margin traffic that was not providing a sufficient return.
"Equipment that was previously used for this marginal traffic has been reassigned to profitable business or retired from the fleet. This is in line with our intention to achieve a better utilisation of our assets."
Tranz Rail's total freight revenue fell by 4.2% on the corresponding six months last year due to the decline in forestry revenue and lower volumes of manufactured products.
Mr Bloomer said the second half of the year would focus on bedding in the new containerised freight services to enable the company to capture new freight business.
"These services are already leading to a big improvement in on-time running and efficiency which will be key to remaining competitive in the freight business."
The company is also looking to progress negotiations on the sale of the Wellington Tranz Metro passenger business.
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