KiwiRail slashes earning forecast
KiwiRail says that a combination of "extraordinary" events meant it must slash its earnings targets for the financial year to June.
KiwiRail says that a combination of "extraordinary" events meant it must slash its earnings targets for the financial year to June.
The state-owned company's chief executive Jim Quinn said KiwiRail's end of year result will be down 12 percent -- $15m below target -- as a result of the Christchurch earthquakes, loss of coal shipments from Pike River mine, and effects of the softer economy eroding domestic freight volumes.
He last night announced that the company was shutting down its TranzCoastal passenger service between Picton and Christchurch for over four months.
A month ago, the company said that rising freight revenue in the first six months of the 2010-11 financial year had given it a boost towards becoming capable of paying its way.
"Despite a comparatively flat economy and severe challenges posed by earthquakes, the business increased its operating revenue and most significantly, its operating profit," chairman John Spencer said.
Freight revenue grew more than 13 percent in the first half-year, and operating profit before depreciation and grant income (effectively ebitda) of $43.3 million increased 66 percent over the comparable period in 2009-2010. Ebitda was the most significant measure for the business's core operations because it reflected the cash being generated.
But last night, Mr Quinn said the full year ebitda target of $120.8m, had been slashed to $105.5m.
Of the difference, $11m was directly attributed to Christchurch earthquakes and the Pike River mine disaster, Mr Quinn said. The dry spring had also affected the volume of bulk milk to be moved, and long-haul passenger numbers had been hurt.
Support from key freight customers remained strong, but many of them had the same difficult trading conditions, and both freight and long-distance passenger volumes were "softer" in winter.
"Forecasting will continue to be difficult until the market settles again after the mixed effects since the second earthquake," said Mr Quinn.
NZPA
Tue, 05 Apr 2011
Tue, 05 Apr 2011
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KiwiRail slashes earning forecast
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