<span class="" id="parent-fieldname-description"> Asbestos contamination, reduced commodities revenue, and a costly outage caused KiwiRail to record a 28.4% earnings drop in the financial year just ended. </span> <p>New Zealand’s state-owned rail operator saw revenues decline by 0.5% in the financial period to NZ$723.6m. Operating expenses, meanwhile rose to NZ$648.3m, up 4.8% year-on-year.</p><p>Those figures combined, along with a NZ$2.2m income from an insurance claim related to the Christchurch earthquake, for an earnings before interest, tax, depreciation and amortisation (EBITDA) figure of NZ$77.5m, down 28.4% year-on-year.</p><p>“After four years of steady revenue and operating earnings growth, a number of material operating issues in 2014 significantly impacted KiwiRail’s earnings,” the operator said in its annual report.</p><p>The detection of asbestos in KiwiRail’s fleet of DL locomotives early in 2014 saw that class suspended from service. “We were able to prioritise services to meet our critical freight demand, but with 40 of our most powerful locomotives out of service there was a negative impact on earnings and costs.”</p><p>On top of that incident, KiwiRail also suffered from the loss of one ship it used for its Interislander ferry service.</p><p>“The loss of the Interislander ship, Aratere, due to a propeller shift failure in November occurred as we were entering the peak of the season,” KiwiRail recounted. The snapped drive shaft immediately forced the ship out of its Interislander schedule.</p><p>“While we moved swiftly to charter a replacement vessel to commence service early January 2014, this event still resulted in revenue loss over that peak period, most significantly our passenger revenue, in addition to increased costs associated with the charter.”</p><p>KiwiRail’s Interislander revenue dropped 6% to NZ$116.6m. Revenue in its core business, freight rail, dropped 0.4% to NZ$462m.</p><p>This was primarily influenced by a slowdown in export logging and dairy volumes from April to June this year, as the prices for those goods fell on international markets, KiwiRail said.</p><p>Those factors all hit the operator on its EBITDA. Once interest, tax, depreciation and amortisation were taken into account, though, it got even uglier for KiwiRail.</p><p>Depreciation and amortisation was up 12.7% to NZ$69.7m. Net finance costs and foreign exchange losses were up 214.7% to NZ$10.7m. Impairments and asset valuation changes saw a loss of NZ$338.5m, a little lower than the NZ$399.3m recorded last year. That left KiwiRail with a net loss after tax of NZ$248m in the 2013/14 financial year, more than NZ$70m larger than the NZ$174.7m loss recorded in 2012/13.</p><p>“2014 was a challenging [financial] year for KiwiRail,” the company said, adding that it is entering the new financial year with caution. “While the economy is solid in some sectors, it’s patchy in the core commodity sectors that make up 40% of the company’s revenue,” it said.</p>
