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KiwiRail to miss FY earnings target even as freight volumes improve

Wednesday 29th February 2012

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KiwiRail, the state-owned railroad, said full-year earnings will miss the target in its statement of corporate intent as improved freight volumes are offset by challenges in the remainder of its businesses.

Earnings before interest, tax, depreciation and amortisation are expected to be $105 million to $115 million in the year ending June 30, compared to the SCI target of $139.5 million, the Wellington-based company said in a statement today.

In the first half, sales rose 5.1 percent to $349 million, while operating expenses climbed 8.1 percent to $305.5 million. While revenue generated operating earnings of $43.5 million, that was swallowed up by $155 million of depreciation and amortisation, tax, finance costs and foreign exchange losses.

The net result was a loss of $118 million in the six months ended Dec. 31, a deterioration from the loss of $111.5 million a year earlier. Government grant income $72.7 million trimmed the loss to $45.7 million, though grant income a year earlier was $202 million and led to a profit of $90.8 million.

EBITDA from freight and infrastructure rose $8.5 million from a year earlier, the company said.

Total operating revenue from freight rose about 11 percent to $221 million, while the Interislander generated sales of $57 million, up 2.5 percent from a year earlier.

The Tranz Scenic’s sales fell 16 percent to $9.9 million, reflecting a loss of customers in the wake of the Christchurch earthquakes. Tranz Metro sales fell 27 percent to $23.7 million, partly reflecting the transfer of assets for the Wellington Metro business to the Greater Wellington Regional Council.

Net finance costs and foreign exchange losses fell to $17.7 million in the first half from $21.6 million a year earlier, helped by foreign exchange gains, it said.

KiwiRail doesn’t currently pay dividends.


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