Tranz Rail Reports Financial Result for the Third

Quarter WELLINGTON, New Zealand (PROTEXT) - Tranz Rail Holdings Limited (Nasdaq: TNZR; New Zealand: TRH) today reported net profit for the quarter ended 31 March 1999 of NZ$16.2 million (or 13 cents per ordinary share) compared to NZ$15.4 million (or 12 cents per ordinary share) for the corresponding quarter last year. Commenting on the result, the Company's Chairman, Edward A. Burkhardt, said it was pleasing to see a 15% freight tonnage increase for the period year-on-year in a very competitive transport market which is operating in a flat New Zealand economy. "However, tonnage gains have been in predominantly lower rated commodity markets. Also customer industry rationalization and product mix changes resulted in shorter average hauls." Mr. Burkhardt said. Revenue for the quarter of NZ$150.4 million decreased NZ$1.9 million (1%) compared to the corresponding period last year. Tranz Link (freight) revenue of NZ$98.9 million increased NZ$0.1 million for the quarter compared to the corresponding period last year. This quarter includes the new Tranz Link International business acquired in September 1998. Tonnage and revenue tonne kilometers increased 15% and 6%, respectively, however, these gains were offset by the change in freight mix and resulting lower average rates. Tranz Rail's passenger business reported revenues of NZ$48.6 million for the quarter, up NZ$1.4 million on the prior year quarter. "Tranz Rail's commitment to improving Interislander ferry services has been demonstrated by the newest addition to the fleet Aratere. While experiencing some initial start up problems Aratere is now in full service and is a valuable addition to the fleet," Mr. Burkhardt said. Other income declined NZ$3.3 million compared to the prior year quarter due to one-off receipts last year and reduced scrap material sales in the current quarter. Total operating costs for the third quarter were NZ$128.4 million being NZ$2.7 million (2%) higher than the prior year. However, this increase is after handling a greater workload than in the previous year. Also, the current year's quarter was impacted by redundancy costs of NZ$2.0 million compared to no charge for the corresponding period last year. This quarter was also impacted by the inclusion of costs associated with the new Tranz Link International operation. This cost contrasts to costs incurred last year in respect of a number of abnormal reported incidents. With regard to labor and related costs average full time equivalent ("FTE") staff numbers for the quarter ended 31 March 1999 were 4,533 which included 398 staff employed in capital programs and 111 in the new Tranz Link International operation compared with 4,792, including 524 capital program staff, for the quarter ended 31 March 1998. "The staff reduction was a good achievement in view of the increased volumes being handled," Mr. Burkhardt said. "The additional volumes being carried have meant additional costs being incurred in all categories of operating costs and mask the cost efficiency gains made in many areas. Furthermore, depreciation costs have increased by NZ$3.8 million compared to the same period last year due to capital expenditures from recent projects". In contrast to these increases, the Accident Compensation and Rehabilitation Corporation ("ACC") premium rates have now been reassessed downwards and a credit to Casualties and Insurance of some NZ$4.0 million was processed in the quarter in respect of the year to date." Operating profit for the quarter was NZ$22.0 million after deducting the redundancy charge of NZ$2.0 million compared to NZ$26.6 million with no redundancy charge for the corresponding period last year. The operating ratio for the quarter was 85.3%, (1998 : 82.5%). Net interest expense and deferred financing costs amortization for the quarter was NZ$4.4 million, an increase of NZ$0.9 million over the corresponding period for the prior year. A revision to the Company's tax accruals resulted in a NZ$4.0 million positive impact. The Company's investment in Australian Transport Network Limited contributed NZ$0.4 million in equity earnings for the quarter; (1998 : Nil). Results for the Nine Month Period Ended 31 March 1999 Net profit for the nine month period ended 31 March 1999 was NZ$29.3 million, down NZ$7.6 million (21% or 5 cents per ordinary share) from the nine month period ended 31 March 1998. Freight tonnes were up 10% compared to the same period last year. This business has been handled at lower average cost than the prior year. With regard to labor, some 323 staff have been made redundant in the first nine months of the year. However, net profit has decreased mainly as a result of reduced average freight rates and increased depreciation costs. Freight tonnes were up overall by 10%, more specifically in forestry (24%), manufactured products (6%), coal (2%) and agriculture and food products (3%), while fertilizers, minerals and aggregates were down (6%) and other freight was down (7%). However, there have been product mix changes and an increased level of lower rated business and as a result average rates are down, more specifically in: forestry (10%), manufactured products (6%), coal (5%), agriculture and food (6%), fertilizer, and minerals and aggregates (8%). As a result of the lower average rates, freight revenue of NZ$295.2 million was down NZ$2.1 million (1%) from the corresponding period last year. Passenger revenue of NZ$123.7 million was NZ$3.3 million above the corresponding period last year due mainly to increased Interisland ferry business. Operating costs for the nine months ended 31 March 1999 were NZ$382.0 million; an increase of NZ$9.4 million (2.5%) over the prior year period. Costs increased primarily as a result of the extra volume of business handled. There was also additional redundancy costs (NZ$3.7 million) and higher depreciation costs (NZ$10.3 million) compared to the prior period. These were offset in part by the reassessment downwards of ACC costs (NZ$4.0 million). Operating profit for the nine month period ended 31 March 1999 was NZ$49.4 million with an operating ratio of 88.5% which compares with NZ$62.6 million and 85.6%, respectively for the nine month period ended 31 March 1998. Net interest expense and deferred financing costs amortization for the nine month period ended 31 March 1999 was NZ$14.4 million, an increase of NZ$6.0 million over the same period last year. A revision to the Company's tax accruals resulted in a NZ$4.0 million positive impact. The Company's investment in Australian Transport Network Limited contributed an additional NZ$1.8 million in equity earnings in the first nine months of the 1999 financial year compared to the prior year. Shares of Tranz Rail Holdings Limited are publicly traded on the New Zealand Stock Exchange under the symbol TRH and the US American Depositary Shares (ADS) of the Company are traded on the NASDAQ National Market System under the symbol TNZR (each ADS is equivalent to three (3) shares). The Company operates the only commercial railroad in New Zealand, offering an integrated network of rail, road, air and sea distribution and logistics management services that provides customers with transport solutions in the Australasian market place and passenger travel experiences in New Zealand. Freight and passenger services utilize 3,900 route kilometers (2,400 route miles) of track, approximately 370 locomotives, 6,400 wagons (freight cars), 160 carriages (passenger railcars), 170 self propelled passenger railcars, 3,000 shipping containers and three roll-on roll-off ferries between the North and South Islands. The Company holds a 27% equity interest in Australian Transport Network Limited which operates freight services in Tasmania, Australia, utilizing 722 route kilometers (450 route miles) of track, 51 locomotives and approximately 729 wagons (freight cars). (http://www.tranzrail.co.nz) TRANZ RAIL HOLDINGS LIMITED (Nasdaq: TNZR; New Zealand: TRH) Quarter Ended 31 March 1999 1998 (unaudited) (NZ GAAP) NEW ZEALAND DOLLARS (in millions except per share data) Total revenue $150.4 $152.3 Total operating costs $128.4 $125.7 Operating profit $22.0 $26.6 Operating ratio 85.3% 82.5% Net profit $16.2 $15.4 Average ordinary shares outstanding (diluted) (in thousands) 123,631 128,086 Earnings per ordinary share (diluted) $0.13 $0.12 Quarter Ended 31 March 1999 (b) 1998 (b) (unaudited) (NZ GAAP) UNITED STATES DOLLARS (in millions except per ADS data) Total revenue $79.7 $88.1 Total operating costs $68.0 $72.7 Operating profit $11.7 $15.4 Operating ratio 85.3% 82.5% Net profit $8.6 $8.9 Average American Depositary Share equivalents outstanding (diluted) (in thousands) (a) 41,210 42,695 Earnings per American Depositary Share equivalent (diluted) (a) $0.21 $0.21 (a) One American Depositary Share (ADS) represents three ordinary shares. (b) New Zealand dollar amounts have been translated into US dollars for convenience at the average daily rate of NZ$1.00 = US$0.5297 and NZ$1.00 = US$0.5780 for the quarters ended 31 March 1999 and 31 March 1998, respectively, based on the noon buying rate New Zealand dollars as reported by the Federal Reserve Bank of New York. TRANZ RAIL HOLDINGS LIMITED (Nasdaq: TNZR; New Zealand: TRH) Nine Month Period Ended 31 March 1999 1998 (unaudited) (NZ GAAP) NEW ZEALAND DOLLARS (in millions except per share data) Total revenue $431.4 $435.2 Total operating costs $382.0 $372.6 Operating profit $49.4 $62.6 Operating ratio 88.5% 85.6% Net profit $29.3 $36.9 Average ordinary shares outstanding (diluted) (in thousands) 123,477 127,767 Earnings per ordinary share (diluted) $0.24 $0.29 Nine Month Period Ended 31 March 1999 (b) 1998 (b) (unaudited) (NZ GAAP) UNITED STATES DOLLARS (in millions except per ADS data) Total revenue $224.7 $267.4 Total operating costs $199.0 $228.9 Operating profit $25.7 $38.5 Operating ratio 88.5% 85.6% Net profit $15.3 $22.7 Average American Depositary Share equivalents outstanding (diluted) (in thousands) (a) 41,159 42,589 Earnings per American Depositary Share equivalent (diluted) (a) $0.37 $0.53 (a) One American Depositary Share (ADS) represents three ordinary shares. (b) New Zealand dollar amounts have been translated into US dollars for convenience at the average daily rate of NZ$1.00 = US$0.5209 and NZ$1.00 = US$0.6143 for the nine months ended 31 March 1999 and 31 March 1998, respectively, based on the noon buying rate for New Zealand dollars as reported by the Federal Reserve Bank of New York. TRANZ RAIL HOLDINGS LIMITED (Nasdaq: TNZR; New Zealand: TRH) TRANZ RAIL HOLDINGS LIMITED PERFORMANCE HIGHLIGHTS Tranz Rail's net profit for the quarter to 31 March 1999 was NZ$16.2 million on revenue of NZ$150.4 million. Revenue of NZ$150.4 million decreased by NZ$1.9 million (1%) on the corresponding period last year. Net profit for the quarter increased NZ$0.8 million (5%) compared to the corresponding period last year. Key comparisons between the quarters: 1999 1998 * Revenue NZ$150.4M NZ$152.3M * Operating profit NZ$22.0M NZ$26.6M * Net Profit NZ$16.2M NZ$15.4M * Operating ratio 85.3% 82.5% * Passenger revenue up 3% * Revenue tonnes (000s) 3,351 2,926 Tranz Rail's net profit for the nine month period to 31 March 1999 was NZ$29.3 million on revenue of NZ$431.4 million. Revenue of NZ$431.4 million decreased NZ$3.8 million (1%) compared to the corresponding period last year. Net profit decreased NZ$7.6 million (21%) compared to the corresponding period last year. Key comparisons between the nine months: 1999 1998 * Revenue NZ$431.4M NZ$435.2M * Operating profit NZ$49.4M NZ$62.6M * Net Profit NZ$29.3M NZ$36.9M * Operating ratio 88.5% 85.6% * Passenger revenue up 3% * Revenue tonnes (000s) 9,649 8,802 ots Original Text Service: Tranz Rail Holdings Limited Internet: http://www.newsaktuell.de Contact: Mark Bloomer, Executive Manager and Chief Financial Officer of Tranz Rail Holdings Limited, +644-498-2043, or fax, +644-498-2014 Web site: http://www.tranzrail.co.nz Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents. PROTEXT