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Earthquake costs KiwiRail in first half

Peter Reidy CEO of KiwiRail. Photo: Brendon O'Hagan

KiwiRail boss Peter Reidy is pleased with the company’s performance despite challenges presented by the recent Kaikoura earthquake which seriously impacted infrastructure and operations on New Zealand’s South Island in November.

KiwiRail announced its FY17 first-half results on February 24.

Revenue was down $48 million to $298 million due to a number of factors, but Reidy is confident the state-owned rail enterprise performed well.

In July 2016, Transdev Wellington took over the Wellington Metro passenger contract.

KiwiRail also reported lower bulk milk volumes.

Together, these two factors reduced KiwiRail’s underlying operating surplus to $23 million.

But with the earthquake’s impact included, the company’s surplus was just $11 million for the first half.

The earthquake resulted in a $9 million cut to revenue, as well as $3 million in additional costs, KiwiRail has reported.

In the face of all these negative factors, Reidy was pleased with how his business had fared.

“KiwiRail’s performance in the first four months of this period showed our strategies of simplifying our business, standardising our assets and investing in our people were moving us in the right direction,” he said.

“At the end of October we were seeing the results of our efforts and anticipating a record summer season for both our freight and passenger businesses.”

The Kaikoura earthquake hit the South Island on November 14.

“November’s earthquake and the closure of the Main North Line have clearly impacted on KiwiRail’s performance and will continue to do so through the second half of the year,” Reidy said.

“This event and the fire which closed the Midland Line [in February] have created challenges to the business as we rebuild the networks and continue to drive efficiencies and reliability for our customers.”

Reidy said despite the challenges, KiwiRail remains on track to deliver $18 million in productivity savings in FY17, building on the $27 million achieved in FY16.

“There is no doubt the organisation has challenges ahead this year but events like the Kaikoura earthquake will only have a short term impact if we continue our focus on reliability and productivity for our customers,” he said.

“That is ultimately what will drive KiwiRail’s transformation into a commercially-focused organisation helping to grow New Zealand.”

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