Photo: RNZ / Samuel Rillstone
KiwiRail has missed its forecast fulll year earnings target despite carrying more freight and greater government investment in the rail network.
The state owned enterprise reported an underlying surplus of $133.9 million for the year ended June, which the chair, David McLean, called creditable.
"Achieving that surplus, which is committed to future core capital reinvestment, is a step along the way to KiwiRail's above rail business becoming self-sustaining."
At its half year report KiwiRail said it expected a 12 month operating surplus between $147m and $162m.
The result excluded depreciation, interest, and various one off costs, reflecting the state owned enterprise's new funding structure, which leaves it responsible for "above rail" costs such as train operations, with the government backed National Land Transport Fund (NLTF) and track-user charges responsible for "below rail" costs such as the track network.
The surplus compared with an underlying profit of $63m the previous year under the previous finance structure.
Freight revenue rose $22m to $449.7m, with increases in bulk freight traffic.
However, the result was hit by costs of mechanical problems affecting the Cook Strait ferries, which forced the chartering of another vessel, and the lack of tourist train income, which was interrupted by the pandemic.
Newly returned chief executive Peter Reidy described the trading environment as "very difficult", but said there were signs of growth.
"We are seeing a growing customer appetite to use rail and an increased focus on driving a commercial outcome for our Above Rail business."
"KiwiRail has continued to deliver on its capital reinvestment programme and is steadily moving towards achieving its revitalisation programme for New Zealand and our customers while building resilience in the Below Rail network," he said.
Capital expenditure for the year was a record $1.1 billion, including the upgrade of the Auckland and Wellington commuter networks, the Northland line to take heavier trains, new rolling stock, and facilities in Christchurch and in Dunedin.
"The government is investing heavily in rail, recognising its benefits to the country in providing an efficient, low-carbon form of freight and passenger transport, and the progress we are making in delivering on that investment is steady," Reidy said.
This year's budget allocated $661.5m for rail infrastructure, including new low emission locomotives scheduled to start arriving in 2024.
KiwiRail is also getting two new hybrid-electric inter-island ferries and terminals in Wellington and Picton.