KiwiRail first half earnings fall 6% on lower coal, logs, dairy volumes; affirms guidance

KiwiRail, the unprofitable government-owned rail operator, reported a 6 percent drop in first-half operating earnings on reduced freight volumes of coal, logs and dairy, and said it would still meet guidance for annual earnings to gain by almost a quarter.

Earnings before interest, tax, depreciation and amortisation fell to $35.1 million in the six months ended Dec. 31, from $37.3 million a year earlier, the Wellington-based company said in a statement. Sales rose 0.3 percent to $366.6 million, while operating expenses increased 1 percent to $331.5 million.

Including $11.4 million of writedowns to the value of interest rate swaps and foreign exchange positions, KiwiRail reported a net loss of $6.8 million in the first half, from a profit of $3.5 million a year earlier.

"Bulk freight was significantly affected by lower volumes of coal being transported in the South Island and the hot, dry summer which impacted on primary production," chairman John Spencer said. "Domestic freight revenue, however, increased on the back of the domestic economy and ongoing migration of road volumes to rail, with growth continuing from our partnerships with NZ freight forwarders in the development of intermodal hubbing points."

New Zealand's biggest ports are racing to tie up the nation's flow of freight, via inland hubs, alliances and partnerships with transport companies, which has included using capacity on KiwiRail's network.

Spencer said the company expects activity from its import/export bulk clients to increase and continued investment by domestic freight forwarders in the second half of the year will underpin earnings growth.

"We are also addressing various elements of our cost base and focusing on delivering property related opportunities over the next five months," he said.

KiwiRail affirmed forecast Ebitda to be in a range of $90 million and $95 million in the year ending June 30, up from $77.5 million a year earlier.

The company's Interislander ferry unit increase revenue 8.5 percent in the period from a year earlier, sailing 99 percent of advertised times.

KiwiRail reported a loss of $248 million in the 2014 financial year, including $338.5 million of writedowns and impairments on the rail operator's asset base.

(BusinessDesk)