Tranz Rail Reports Financial Result for the Third

Quarter WELLINGTON, New Zealand (PROTEXT) - Tranz Rail HoldingsLimited (Nasdaq: TNZR; New Zealand: TRH) today reported netprofit for the quarter ended 31 March 1999 of NZ$16.2 million (or13 cents per ordinary share) compared to NZ$15.4 million (or 12cents per ordinary share) for the corresponding quarter lastyear. Commenting on the result, the Company's Chairman, Edward A.Burkhardt, said it was pleasing to see a 15% freight tonnageincrease for the period year-on-year in a very competitivetransport market which is operating in a flat New Zealandeconomy. "However, tonnage gains have been in predominantly lower ratedcommodity markets. Also customer industry rationalization andproduct mix changes resulted in shorter average hauls." Mr.Burkhardt said. Revenue for the quarter of NZ$150.4 million decreased NZ$1.9million (1%) compared to the corresponding period last year. Tranz Link (freight) revenue of NZ$98.9 million increasedNZ$0.1 million for the quarter compared to the correspondingperiod last year. This quarter includes the new Tranz LinkInternational business acquired in September 1998. Tonnage andrevenue tonne kilometers increased 15% and 6%, respectively,however, these gains were offset by the change in freight mix andresulting lower average rates. Tranz Rail's passenger business reported revenues of NZ$48.6million for the quarter, up NZ$1.4 million on the prior yearquarter. "Tranz Rail's commitment to improving Interislander ferryservices has been demonstrated by the newest addition to thefleet Aratere. While experiencing some initial start up problemsAratere is now in full service and is a valuable addition to thefleet," Mr. Burkhardt said. Other income declined NZ$3.3 million compared to the prioryear quarter due to one-off receipts last year and reduced scrapmaterial sales in the current quarter. Total operating costs for the third quarter were NZ$128.4million being NZ$2.7 million (2%) higher than the prior year.However, this increase is after handling a greater workload thanin the previous year. Also, the current year's quarter wasimpacted by redundancy costs of NZ$2.0 million compared to nocharge for the corresponding period last year. This quarter was also impacted by the inclusion of costsassociated with the new Tranz Link International operation. Thiscost contrasts to costs incurred last year in respect of a numberof abnormal reported incidents. With regard to labor and related costs average full timeequivalent ("FTE") staff numbers for the quarter ended 31 March1999 were 4,533 which included 398 staff employed in capitalprograms and 111 in the new Tranz Link International operationcompared with 4,792, including 524 capital program staff, for thequarter ended 31 March 1998. "The staff reduction was a good achievement in view of theincreased volumes being handled," Mr. Burkhardt said. "Theadditional volumes being carried have meant additional costsbeing incurred in all categories of operating costs and mask thecost efficiency gains made in many areas. Furthermore,depreciation costs have increased by NZ$3.8 million compared tothe same period last year due to capital expenditures from recentprojects". In contrast to these increases, the Accident Compensation andRehabilitation Corporation ("ACC") premium rates have now beenreassessed downwards and a credit to Casualties and Insurance ofsome NZ$4.0 million was processed in the quarter in respect ofthe year to date." Operating profit for the quarter was NZ$22.0 million afterdeducting the redundancy charge of NZ$2.0 million compared toNZ$26.6 million with no redundancy charge for the correspondingperiod last year. The operating ratio for the quarter was 85.3%,(1998 : 82.5%). Net interest expense and deferred financing costs amortizationfor the quarter was NZ$4.4 million, an increase of NZ$0.9 millionover the corresponding period for the prior year. A revision tothe Company's tax accruals resulted in a NZ$4.0 million positiveimpact. The Company's investment in Australian Transport NetworkLimited contributed NZ$0.4 million in equity earnings for thequarter; (1998 : Nil). Results for the Nine Month Period Ended 31 March 1999 Net profit for the nine month period ended 31 March 1999 wasNZ$29.3 million, down NZ$7.6 million (21% or 5 cents per ordinaryshare) from the nine month period ended 31 March 1998. Freight tonnes were up 10% compared to the same period lastyear. This business has been handled at lower average cost thanthe prior year. With regard to labor, some 323 staff have beenmade redundant in the first nine months of the year. However, netprofit has decreased mainly as a result of reduced averagefreight rates and increased depreciation costs. Freight tonnes were up overall by 10%, more specifically inforestry (24%), manufactured products (6%), coal (2%) andagriculture and food products (3%), while fertilizers, mineralsand aggregates were down (6%) and other freight was down (7%).However, there have been product mix changes and an increasedlevel of lower rated business and as a result average rates aredown, more specifically in: forestry (10%), manufactured products(6%), coal (5%), agriculture and food (6%), fertilizer, andminerals and aggregates (8%). As a result of the lower averagerates, freight revenue of NZ$295.2 million was down NZ$2.1million (1%) from the corresponding period last year. Passenger revenue of NZ$123.7 million was NZ$3.3 million abovethe corresponding period last year due mainly to increasedInterisland ferry business. Operating costs for the nine months ended 31 March 1999 wereNZ$382.0 million; an increase of NZ$9.4 million (2.5%) over theprior year period. Costs increased primarily as a result of theextra volume of business handled. There was also additionalredundancy costs (NZ$3.7 million) and higher depreciation costs(NZ$10.3 million) compared to the prior period. These were offsetin part by the reassessment downwards of ACC costs (NZ$4.0million). Operating profit for the nine month period ended 31 March 1999was NZ$49.4 million with an operating ratio of 88.5% whichcompares with NZ$62.6 million and 85.6%, respectively for thenine month period ended 31 March 1998. Net interest expense and deferred financing costs amortizationfor the nine month period ended 31 March 1999 was NZ$14.4million, an increase of NZ$6.0 million over the same period lastyear. A revision to the Company's tax accruals resulted in aNZ$4.0 million positive impact. The Company's investment in Australian Transport NetworkLimited contributed an additional NZ$1.8 million in equityearnings in the first nine months of the 1999 financial yearcompared to the prior year. Shares of Tranz Rail Holdings Limited are publicly traded onthe New Zealand Stock Exchange under the symbol TRH and the USAmerican Depositary Shares (ADS) of the Company are traded on theNASDAQ National Market System under the symbol TNZR (each ADS isequivalent to three (3) shares). The Company operates the onlycommercial railroad in New Zealand, offering an integratednetwork of rail, road, air and sea distribution and logisticsmanagement services that provides customers with transportsolutions in the Australasian market place and passenger travelexperiences in New Zealand. Freight and passenger servicesutilize 3,900 route kilometers (2,400 route miles) of track,approximately 370 locomotives, 6,400 wagons (freight cars), 160carriages (passenger railcars), 170 self propelled passengerrailcars, 3,000 shipping containers and three roll-on roll-offferries between the North and South Islands. The Company holds a27% equity interest in Australian Transport Network Limited whichoperates freight services in Tasmania, Australia, utilizing 722route kilometers (450 route miles) of track, 51 locomotives andapproximately 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 threeordinary shares.

(b) New Zealand dollar amounts have been translated into USdollars 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 March1999 and 31 March 1998, respectively, based on the noon buyingrate New Zealand dollars as reported by the Federal Reserve Bankof 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 threeordinary shares.

(b) New Zealand dollar amounts have been translated into USdollars 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 31March 1999 and 31 March 1998, respectively, based on the noonbuying rate for New Zealand dollars as reported by the FederalReserve 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 wasNZ$16.2 million on revenue of NZ$150.4 million. Revenue ofNZ$150.4 million decreased by NZ$1.9 million (1%) on thecorresponding period last year. Net profit for the quarterincreased NZ$0.8 million (5%) compared to the correspondingperiod 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 March1999 was NZ$29.3 million on revenue of NZ$431.4 million. Revenueof NZ$431.4 million decreased NZ$3.8 million (1%) compared to thecorresponding period last year. Net profit decreased NZ$7.6million (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 OriginalText Service: Tranz Rail Holdings Limited Internet:http://www.newsaktuell.de Contact: Mark Bloomer, ExecutiveManager and Chief Financial Officer of Tranz Rail HoldingsLimited, +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 bepublished under the "CTK" slug. Protext is a commercial serviceproviding distribution of press releases from clients, who areidentified in the text of Protext reports and who bear fullresponsibility for their contents.

PROTEXT