KiwiRail Profit 66% Short Of Target


If the government needed a public excuse to do something drastic about KiwiRail, it probably got it today.

Poor KiwiRail chose a bad day to release it’s last six-month figures.

It was the same day that the government’s infrastructure report out today again saying KiwiRail, bought back by Labour, will have to become more commercially sound. Today’s figures showed net profit, including government capital grants, was $125.6m for the 6months to December.

That’s a whopping  66% short of the target set in its Statement of Corporate Intent.

It blames this largely on the capital work being don on the Auckland and Wellington rail networks and talked of the difficult economic conditions and its  attempted “careful “capital expenditure management.

And they’re doing a great job in the cities, making up for decades of rail infrastructure neglect, thanks to past government decisions or lack of them.

KiwiRail head Jim Bolger riding Auckland trains yesterday

Long distance passenger train traffic was a bright spot, running ahead of target but it’s not clear this will still plans to consider stopping the present Capital Connection Wellington –Palmerston North run.

The government has made no secret of its dislike of Labour buying back the rail and its desire to make it profitable or consider hiving off some of its business.

Today’s infrastructure report signalled the Government wants to set KiwiRail “on a path towards commercial independence and long-term viability.”

It says: “For that reason, any financial support for it will focus on helping it catch up on deferred capital expenditure in those parts of the rail network where rail offers the greatest comparative advantage to other transport modes, based on undistorted price signals.

“This is likely to be in the transport of bulk goods, and imports and exports to and from major ports, where rail offers a vitally important alternative to road transport. This will relieve congestion and provide a greener and more cost-effective transport solution for some users. n the urban areas of Auckland and Wellington, metro rail services remain the responsibility of the regional councils.”

MORE on the infrastructure report

Report acknowledges Kiwirail locomotives need replacement




  1. cierat says:

    all these numbers are not quite that clear as they are surely based on public sector accounting…. but they do show that the business has a long way to go to unlock its true value and is being held back, especially with things like… 1. The track: infrastructure still seems to be run like an oldschool government department, paying through the nose for bungles like the problems with Wellington overhead last week… 2. Track access agreement: still not done even though main reason for the purchase from toll. But what is the required standard for track and how are the infrastructure assets supposed to be managed long term and most efficintly??? 3. Train assets: no news of a sell down or scrapping of redundant and obselete assets in freight etc … 4. Labour inefficiencies/overpriced labour inputs… 5. Bureaucracies with regional councils geared for funding rather than giving freedom and incentives to perform… 6. lack of or weak economies of scale due mainly to reliance on old assets and work practices. 7. road user charges probably still cross subsidised, so cheaper than rail user charges 8. monopoly complacency as no opening up to allow other train users to shift freight and people.

  2. Jon R says:

    The only point I can see of validity in your list, Cierat, is the fact that the trucks (and long distance coaches) have HEAVY INDIRECT SUBSIDIES through RATEPAYERS and other motorists.

  3. ingolfson says:

    Okay folks, KiwiRail has just declared a 66% shortfall on their “profitability”, while motorways overfilled all plan targets in returning $25 surplus from the Northern Gateway toll machines.

    National is now backing away from their ambitious rail plans of this morning, and returning to the scheduled rail sell-off.

    Thank you for sharing your vision with us.

  4. Max says:

    1 - As opposed to paying through your nose while getting rorted on PPP contracts, plus a top-up fee for the lawyers?

    3 - how can you sell obselete equipment when there is nothing to replace it with? You can run a rail service with scrapyard stock, strong band-aids and a lot of equipment failure. You can’t run it on empty air.

    Mmmmh, virtual railways. Maybe we could compete with Steven Joyce’s virtual fleet of electric cars?

    4 - what do you base that on? Also, there was an item recently saying that train drivers are hopping the ditch to work in Aussie - so obviously they aren’t being paid all that much here.

    5 - I am unaware of the situation the rest of New Zealand, but Auckland has jack all ability to control rail, so the argument seems to look weak.

    6 - See 3.

    7 - Oh, yes.

    8 - Complacency? If I worked at KiwiRail, under this government, I would give thanks every morning that I still had a job, or at least I had not been sold off into private hands again. If there is complacency, it may be more of the one engendered as per 3 and 6 - being beaten over the head for inefficiency all the time while having to compete with old wrecks against a massively subsidised roading system that is just getting another major upgrade… yeah, that could make one depressive and start to not care as much as one should…

  5. Jeremy Harris says:

    It is not suprising, this national asset has been run done and asset stripped for a quarter of a century… The alternative would flood the road with trucks the cost of which would be massive… There is no alternative but to renew the asset…

  6. Kurt says:

    Given the downturn in New Zealands economy as well as the rest of the world and the real efforts going into upgrading some of the track network and infrastructure its not a bad result really.

    This government really has to stop constantly talking Kiwirail down, wake up and realise the worlds changed as Warren Buffett realised.

  7. cierat says:

    Max, I don’t think you quite get my points, I stand by them 110%. The business has promise, but these issues need to be tackled by kiwirail and government headon with some brutal honesty… excuses not an option.

    What has kiwirail done right? 1. New locos ordered for reliability and to address customer concerns… 2. Responsibility taken for infrastructure bungles affecting all us Wellington passengers but no undertaking to fix underlying problems… 3. can anyone take this up to 10? ;)


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