A national freight downturn in a soft domestic economy, and a series of one-off events, contributed to a fall in KiwiRail’s bottom line in the half year to 31 December 2024. However, good progress was made in delivering on the company’s transformation plan and investments which together are positioning KiwiRail for future growth.

KiwiRail recorded an operating surplus of $25.8 million for the half year, $14.7m behind the same period last year. On top of the challenging commercial environment, one-off impacts included losing freight volume as a result of the closure of Winstone Pulp International (WPI), the Tawhai tunnel collapse, a delayed start to re-opening the North Auckland Line which was damaged by Cyclone Gabrielle and redundancies as the company better aligned itself to the markets it serves.

“As a key part of New Zealand’s supply chain, KiwiRail quickly feels the impact of any economic downturn,” KiwiRail Acting Chair Rob Jager says.

“Overall, rail freight net tonne kilometres were down 7 per cent over the half year, consistent with the general freight market reduction of 7 – 10 per cent. Normalising for one-off events, KiwiRail’s freight volume was down 2 – 3 per cent.

“However, we are working hard internally and with customers to improve our service levels and to ensure that when confidence returns to the economy, we are in a position to attract more freight to rail. The reinstatement of the North Auckland Line after Cyclone Gabrielle and Fonterra’s return to rail, the steady long-term demand outlook for dairy and forestry, and the reinstatement of Tawhai tunnel and resumption of the coal programme are all positive.” 

After losing volume with the closure of WPI, KiwiRail worked with logging operator Ernslaw One and other parties on a transport solution that was sustainable for Ernslaw One, KiwiRail and Rangitikei District Council. As a result, Ernslaw One is now moving its logs to Port of Napier by rail, instead of by road, unlocking the safety and road maintenance cost benefits of rail for regional ratepayers.

Our partnership with Coca-Cola, our fourth largest domestic customer, to design and deliver a rail siding extension at its Mt Wellington Distribution Centre enables a reduction of up to 7000 truck movements per year through Central Auckland and North Island highway. This unlocks sustainability, safety, congestion and road maintenance benefits on these corridors.

KiwiRail Chief Executive Peter Reidy says that throughout HY25, KiwiRail helped its customers deliver through a tough period. The company also focused on its multi-year transformation programme to reshape KiwiRail so it increases productivity, and better meets the needs of customers and the expectations of shareholders. 

In the six months to 31 December, rail freight volumes of 1.6 billion net tonne kilometres resulted in 105,000 fewer tonnes of CO2 emissions, a 39.4m litre fuel saving and less congestion and wear and tear on the roads than if that same freight had moved by truck. It also contributed to incremental GDP outputs. The total value of rail to New Zealand’s economy is estimated at $3.3 billion a year.

Mr Reidy says, “I am confident that KiwiRail is well-placed to make the most of the economic growth to come, and to contribute to it by delivering more value to our customers and to New Zealand.”