Tranz Rail Q2 revenue up but fuel costs bite

The company's interim loss of $6.7 million is a far cry from last year's half-year profit of $21 million, but much of the loss was accounted for in the September quarter.

That was when the company took a $16.5 million dollar hit for "an abnormal provision for organisation change" and announced it wanted to get rid of rail passenger and refrigerated road freight services to concentrate on its interisland ferry business and rail freight.

In the latest results Tranz Rail says its net profit for the quarter ended December was $9.8 million compared to $15.5 million in 1999, although total revenue for the quarter improved 3% over last year to $162.5 million.

Both freight and passenger revenue grew, partly as a result of increased charges as the company tried to claw back spiraling fuel costs.

Average fuel prices for rail diesel fuel and light fuel for the December quarter were 91% and 61% higher, respectively, than for the same period in 1999.

However Tranz Rail says most of its increased passenger revenue, which rose 13% to $37.4 million, could be attributed to an increase in interisland passenger numbers. There were also increased numbers travelling on the company's Tranz Scenic and Tranz Metro rail passenger services.

The company has updated plans to divest a number of its services, saying talks are underway with the Wellington Regional Council to sell its local passenger rail operation there as a going concern.

It has also received expressions of interest for the Tranz Scenic long distance passenger services and the refrigerated road freight businesses, and an announcement on the sale of the two businesses is expected in April.

An agreement with the Auckland Regional Council to buy the local rail corridor for $112 million has also progressed, with Tranz Rail agreeing to pay $2 million a year towards maintaining the track and infrastructure.

However the company warns that while the change programme is now well underway, it will take time to complete and says, "in the meanwhile the operating results will not be satisfactory".

Today's result, which was released after the market closed, was not as bad as some analysts had been predicting. TRH shares closed down 15 cents at $3.60.

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