Ferry loss a big cost for KiwiRail
KiwiRail estimates losing the use of the Cook Strait ferry Aratere, which lost a propeller in November, will cost the company between $20 million and $30m.
The state-owned rail and Cook Strait ferry company today reported a 20 per cent drop in operating profit of $37.3m for the half year to December 31 due to several factors, including the Aratere outage.
Revenue increased nearly $3m on the same period a year earlier to $365.5m.
KiwiRail forecast a operating profit of between $90m and $100m for the full year, about $20m-$30m below its target.
Chairman, John Spencer said domestic freight volumes increased by more than 11 per cent and the Scenic business' profitability was improving.
But the impact of events including the Aratere shaft failure, extreme weather, the Seddon earthquakes and the challenges experienced by some parts of the primary export sector, have had a negative impact on the overall results.
"We have estimated that the impact of the Aratere's outage this financial year will be between $20 and $30 million," he said.
"This includes lost passenger, rail freight and commercial vehicle revenue, an increase in freight costs to minimise the impact on customers and the charter cost for the replacement ferry, Stena Alegra."
The Aratere is in a drydock in Singapore for repairs.
"The financial impact is significant and we are doing all we can to mitigate that impact," Spencer said.
"We are also in discussions with our shareholder to ensure we have the necessary financial capacity for the remainder of the year.
"The forecast for rail freight is increased export and liquid-milk volumes for the rest of the year and we are expecting further growth in log volumes due to strong overseas prices.
"Also our domestic volumes for last month were well ahead of this time last year, so we feel confident this growth will continue over the coming months."
Interislander has been hit hard by the Aratere incident which had led to some reduction in passenger volumes, but freight volumes had held up with truck traffic increasing by more than 8 per cent, Spencer said.
Both of KiwiRail's passenger businesses - the TranzMetro Wellington service and the long distance Scenic services - recorded improved performance over the half year, he said.
TranzMetro passenger numbers increased by about 56,000, leading to a a corresponding increase in passenger yield, he said.
The re-invigorated Scenic services were also showing signs of growth, particularly at the start of this calendar year.