Disruption to South Island rail services caused by the November 2016 Kaikoura earthquake masked a continuation in improved operating earnings from state-owned railway operator KiwiRail in the six months to December 31.

The company reported an operating surplus of $15 million for the period, which would have come in at $40m once the one-off costs associated with the closure of the main trunk line between Picton and Christchurch were stripped out.

While quake impacts would still be felt in the second half of the current financial year, KiwiRail was still on track to deliver operating earnings of between $30m and $50m, said chief executive Peter Reidy.

In the previous comparable period, which included the first few weeks of the outage caused by the massive Kaikoura quake, KiwiRail reported operating earnings of $11m, or $23m underlying once quake impacts were backed out.

As always, the national rail carrier did not report a statutory profit on its activities, reporting a $193m loss for the half-year.

That reflects the fact that revenue earned “above rail” is always far lower than would be required to fully maintain the capital-intensive network.

However, the importance of maintaining a rail network for wider economic and national interest reasons means both the previous and present government accept KiwiRail will always make accounting losses.

The result for the half-year was achieved on revenue of $292.7m, 1.9 per cent down from the $298.3m recorded in the last six months of 2016, and reflecting the fact that the Kaikoura link was only restored in September 2017.

Operating expenses, at $277.4m, were 3.5 per cent lower than in the previous comparable period.

Ports revenue from KiwiRail’s trucking and rail services was up 16 per cent on the half-year, which chairman Trevor Janes said was a “strong result” when placed against overall container volume growth of 7 per cent nationally in the same period.

Forestry revenues rose 8 per cent as the so-called ‘wall of wood’ from maturing plantation forests starts to come on-stream.

Dairy industry and coal volumes rose, contributing to a 6 per cent increase in bulk freight revenue.

Poor weather and “significant and unexpected” repair costs on the company’s ageing South Island locomotive fleet contributed to a “messy” six months, Janes said.

KiwiRail was “working closely with the government on the urgent need for longer-term funding for the organisation, which is critical for efficient procurement, planning and safety”.

The Interislander ferries showed a 12 per cent increase in commercial vehicle ‘lane metres’ as more freight had to travel by road while the rail outage persisted, while passenger revenue rose 7 per cent and yields on vehicle crossings improved.

Reidy said KiwiRail was targeting operating savings of $7m this year, building on $45m of productivity improvements in the last two years.

Announcements relating to the revival of some mothballed regional rail services are expected when the government unveils detail of its $1 billion a year regional economic development fund, in Gisborne, on Friday.