Below Rail Infrastructure, Freight Rail, Operations & Maintenance, Passenger Rail, Track & Civil Construction

$133.9m surplus for KiwiRail

KiwiRail has recorded an operating surplus of $133.9 million for the year ending June 30, 2022.

Board chair David McLean said it was a creditable result given the difficult conditions in FY22.

“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,” he said.

The FY22 result is the first full-year result to be reported under KiwiRail’s new funding model. Under this model, the below-rail or the network component of the railway is now fully funded through the National Land Transport Fund (NLTF), supported by the Government and by track-user charges from the market.  This means the reported Group operating surplus reflects the performance of KiwiRail’s commercial above-rail business.

McLean noted that because of the change in the way KiwiRail is funded, the surplus could not be easily compared to those of previous years.

Total freight revenue was $449.7m, up $22m on FY21. This increase reflected a strong performance in IMEX (import-export), where revenue was up $18.3m, as well as the bulk and domestic sectors.

However, those gains in the freight sector were offset by a difficult year for Interislander, which was affected by major mechanical issues. This included a serious gearbox failure on Kaiarahi which took it out of service from the end of August 2021. An additional ship, Valentine, was leased to fill the gap created.

Chief executive Peter Reidy said in FY22 there was a 23.2 per cent reduction in the Total Recordable Injuries Frequency Rate – which records how often injuries are happening at work – from 31.2 to 23.96 injuries per million people-hours worked.

“However, this is still too high. I am determined to push our commitment to safety, and to show that we care for our people by promoting visible leadership built on the belief that all injuries are preventable,” he said.

Reidy said he $133.9m surplus was achieved despite a very difficult operating and trading environment including the ongoing impact of COVID.

“KiwiRail has continued to deliver on its capital reinvestment program and is steadily moving towards achieving its revitalisation program for New Zealand and our customers while building resilience in the below-rail network.

“Capital expenditure for the year was $1.1 billion. This represents the largest level of capital investment in a single year in KiwiRail’s history.

“Investment is being made in upgrading the rail network, infrastructure and operating systems, and investing in rolling stock capacity, the facilities used to service our wagons and locomotives, and in new ships and terminal capacity for Interislander services.

“On the network, significant progress was made on the Auckland and Wellington metro upgrades. Spending on the Auckland metro network was $338.7m and on the Wellington metro network $93.3m.

“Over the Christmas period, when commuter trains were halted to allow work to proceed, there were more than 1000 people working trackside in Auckland in the single biggest mobilisation of resources for a temporary rail closure KiwiRail has carried out. Concurrently 300 people were deployed on the Wellington network.

“Another $49.9m was invested in the Northland rail network as part of a program that will see heavier axle trains running faster north of Auckland.

“We are continuing to develop the business case for a new rail line to Northport.

“The spending on replacement of aged rolling stock of $186.3m included the signing of a contract with Swiss firm Stadler in October last year for 57 state-of-the art locomotives for the South Island. The locomotives, which are being built in Spain, will begin arriving in early 2024.

“The new locomotives are a significant step forward in transforming KiwiRail into a 21st century transport services business to deliver increased capacity to support rail freight and passenger services with our customers.

“The upgrade to our rolling stock maintenance and refurbishment mechanical facilities, including major work at the Hutt Workshops and a new facility at Waltham in Christchurch, are progressing well.

“Construction at Hillside Workshops in Dunedin is underway and will allow us to start assembling wagons locally again from late 2023.”