KiwiRail’s leadership has warned the business faces a potential dip in revenue in 2017 due to “challenging” economic headwinds, at its recent annual public meeting in Wellington.
Addresses from KiwiRail chairperson John Spencer and chief executive Peter Reidy highlight those challenges as including the decline of such cargoes as coal, excess capacity on Cook Strait and the emergence of additional competition from larger-sized trucks.
Positives were noted as a potential recovery of coal prices, an increase in passenger volumes alone on Cook Strait and strong benefits from increased forestry harvesting.
In the most recent financial year, KiwiRail exceeded one of its key Statement of Corporate Intent (SCI) targets for the first time in delivering an underlying operating surplus of $86 million (excluding $10 million in one-off restructuring and Wellington Metro tender costs). However, its comparable operating revenue declined 3.7% to $694 million and was $9 million below the SCI target.
Taking positive strides to de-risk its business and find new operational efficiencies and cost-savings, KiwiRail’s leadership emphasises that its “above rail” operation is cash positive.