KiwiRail's financial report for the year ended June
showed glimmers of hope for an eventual turnaround in the rail
network operator's fortunes, but chief executive Jim Quinn
realises there is still a way to go.
The highlight for Mr Quinn in the period was a nearly 15%
increase in freight carried, with revenue rising to $457.6
million from $389.5 million in the previous corresponding
Total revenue increased 7.2% to $715.8 million in the period
but expenses rose 9.1% to $610.8 million.
The operating profit, before any major one-off items, fell
2.6% to $104.9 million from $107.7 million in the pcp.
From there, the balance sheet deteriorates substantially.
Major one-off items wiped $27.4 million from the operating
profit to give a before-tax profit of $77.6 million, down
The most damaging item to the balance sheet was the $2.2
billion write-down of the assets after a revaluation to put
them on a commercial basis was undertaken.
That took the state-owned company to a reported loss of $2.3
billion for the year compared with a $34 million profit in
Mr Quinn said in an interview the write-down was part of the
company's "ambitious plan" to become self-sustaining.
"Are we there yet? Hell no. We are miles away. This is a
30-year job and the next 10 years will be focused on getting
"We have to make massive investment to take the business back
to being in the state it should rightly be in."
Mr Quinn maintained he was committed to staying with KiwiRail
and seeing through the plan that would include: restructuring
the infrastructure and engineering business unit; the
potential sale of Hillside Workshops; seeking a partner for
the Scenic business; and the review of units that were not
providing positive economic returns.
Asked whether closing lines, services or workshops was the
best way ahead if freight revenue was growing and customer
numbers were increasing, Mr Quinn said KiwiRail wanted to be
sustainable and generate enough cash to reinvest to expand
without begging for more.
"We are not rushing into it. We are carefully evaluating our
operations. If it is sustainable, we sit with it. If not, we
KiwiRail planned to spend about $1 billion during the next
three years but everything, including generating more
operating cash flow, had to be geared to adding profit to the
bottom line, he said.
Customers were responding well to the services provided by
KiwiRail and the company was confident it would continue to
increase its freight-carrying operations.
Mr Quinn agreed with the suggestion that for New Zealand to
have a sustainable rail network, people had to use it to move
Notes to the financial statements said the flat global
economy had hurt the company.
"Despite continued strong growth in our core rail freight
business, with freight volumes 11% up on prior year, this has
been offset by trading and operating challenges in the
balance of our business."
Mr Quinn said the ongoing reduction in tourism because of the
Christchurch earthquakes continued to affect the Scenic and
Interisland passenger business.
Looking ahead, Mr Quinn said his immediate goals for the
current financial year were making the hard decisions
previously indicated and growing the freight-carrying side of