KiwiRail first-half profit two-thirds below target amid tussle over capex

Tuesday 2nd March 2010

New Zealand Railways, which trades as KiwiRail, fell short of its first-half profit target by two-thirds amid ongoing negotiations with the government over funding for capital expenditure.

Net profit including government capital grants was $125.6 million in the six months ended December 2, 66% short of the target set in its Statement of Corporate Intent. This was due to the timing of capital work on the metropolitan networks and “careful” capex management as discussions with the government over the business’ future continue, it said in a statement.

Chairman Jim Bolger said comparisons between December 2009 and the same period a year earlier were difficult as the former Toll and United Group businesses were only included in part of the 2008 year’s report.

Revenue was 8% short of the SCI target, while earnings before interest, taxation, depreciation and amortisation was 12% ahead of the target. Over the next six months, the rail operator will look to boost revenue, with its full-year EBITDA target of $59.6 million still the company’s objective.

“As we discuss with our shareholder a long term strategy for the rail industry, we can look forward to improved performance and a greater contribution to the New Zealand economy,” Bolger said in a statement.

KiwiRail came into existence after former Finance Minister Michael Cullen bought the railway in 2008 from Toll Holdings after a checkered history that saw the degradation of the network by a variety of owners.

Since the National Party took power at the end of 2008, questions have hung over its viability as it became apparent the new government was less willing to subsidise the rail operator.

Businesswire.co.nz

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