KiwiRail has announced a $75.9 million loss for the six months to December, a worsened result compared with its $45.7m loss the same time last year.
The rail operator said it was resolving a number of strategic issues that better positioned the overall business as it continued on the path to financial sustainability.
"In the last six months we have sold the Hillside foundry, mothballed the Napier to Gisborne line, restructured the infrastructure and engineering business, and completed the balance sheet restructure," chairman John Spencer said.
"While acknowledging the impact some of these decisions have had on communities and our people, they had to be made for the benefit of the entire business.
"We can't shy away from the fact that while we have made good progress over the last few years there is still a long way to go. If these hard decisions aren't made we simply won't achieve our objectives," Spencer said.
The company said revenue and operating surplus had increased in the half year due to continued growth in its core freight business. Overall business revenue was up 4 per cent to $363m, while its operating surplus of $47m was up 7.6 per cent.
New, much needed rolling stock was performing well and the company had ordered a further 20 new locomotives and 300 container wagons to be delivered this year, Spencer said.
On December 31, KiwiRail was split into two entities - a new State Owned Enterprise named KiwiRail Holdings Limited, and New Zealand Rail Corporation (NZRC).
"This decision provides the business with a structure that better reflects commercial reality as it separates the commercial operations from the land assets. This delivers a more accurate basis for measuring our financial performance," the chairman said.
Revenue from its core freight business rose 21 per cent, due to increased shipping and port movements leading to higher volumes.
That helped to offset less growth in the bulk and domestic freight businesses, which saw lower volumes of coal and milk than forecast, and the impact of a threatened Interislander strike.
KiwiRail's long distance passenger business had seen some growth in numbers.
The Northern Explorer's growth was in line with expectations, but still some way from being profitable. The company also expected passenger numbers on the TranzAlpine to continue to grow alongside the Christchurch rebuild.
However, while the Coastal Pacific had achieved a small increase it was not enough to guarantee the service would continue in its current format. A decision was expected shortly, Spencer said.
The recent news regarding Solid Energy and concerns over whether ongoing dry conditions would impact milk production was expected to affect bulk freight growth, he said.