KiwiRail reports big hit to bottom line after cancellation of Interislander project

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Bluebridge and Interislander in Picton Marlborough sounds
Photo: RNZ/ Rachel Thomas

KiwiRail has reported a large hit to its bottom line after the cancellation of the Interislander ferry and terminal project.

Its net deficit for the six months ended December was $407 million, largely thanks to $442m in costs relating to the project.

That compared to a $65.1m loss for the same period a year ago.

The state-owned company’s operating surplus fell 50 percent to $40.5m, as freight volumes decreased due to weaker economic activity.

Its services revenue fell nearly $21m to $375m.

“In December, the government advised our board it had decided not to provide further funding for the Inter-Island Resilient Connection (iReX) project to build two new ferries and associated landside and port infrastructure,” board chair David McLean said.

“We are in the process of winding down the current new ship project and reviewing options for the Cook Strait connection. We will work with the Ministerial Advisory Group, our customers, ports, iwi and other stakeholders on options for maintaining a safe and reliable service across Cook Strait.”

KiwiRail said Interislander ship availability was at 97 percent, with on-time customer performance at 85 percent.

Tourism revenue had improved, but the slowing economy had affected its freight business.

“While export volumes were in line with expectations, high inventory levels in customer warehouses and lower economic activity in China impacted import flow to New Zealand,” McLean said.

“The lower imports translated into very soft domestic demand for goods transported throughout the country, affecting transport operators across the sector.”

Chief executive Peter Reidy said market conditions were volatile in the first six months of the financial year as most domestic sectors reported lower demand.

“Fonterra had a slow start to the export dairy season, however, volumes are forecast to be in line with last year. Meat exports were down by 15 percent compared to the previous period, and log export volume has increased, centred on the Eastern Bay of Plenty,” Reidy said.

He warned the second half of the year would remain challenging.