KiwiRail optimistic despite profit fall

State-owned enterprise KiwiRail has started its turnaround journey with an 11 per cent fall in operating profit on the previous year, but new chairman John Spencer said there is reason to be optimistic about the future.

Releasing selected figures, KiwiRail said operating profit before depreciation and grant income for the year to June 2010 was $74.4 million, 11 per cent down on the previous year. But Spencer said true comparisons are difficult because the former Toll and United Group businesses, purchased by KiwiRail in 2008, were only included in part of the year's reporting period.

He said it was more valid to compare the result with targets set for the year in KiwiRail's Statement of Corporate Intent (SCI) which showed revenue just 1.3 per cent below target, but earnings before interest, tax, depreciation and amortisation 26.1 per cent up on the SCI target of $59m.

Net profit after tax at $185.5m was about 46 per cent below the SCI target of $348.3m.

Most of the shortfall resulted from the timing of capital work on Metro passenger projects in Wellington and Auckland, Spencer said, with a further $34m arising from tax changes in depreciation on buildings and differences from the underlying foreign exchange assumptions from the SCI.

KiwiRail's full year accounts will be published when they are tabled in Parliament.

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