KiwiRail, the state-owned railway, lifted operating revenue on improvements in freight, the Interislander and network, while net profit tumbled as grant income fell and it transferred Wellington commuter assets to the local council.

Net profit fell 83 per cent to $34 million as the railway recognised a loss on the transfer of assets to Greater Wellington Regional Council and recorded a decline in grant income that reflected completion of projects. Operating revenue climbed 2.6 per cent to $667.4 million.

The operating surplus excluding grant income and depreciation rose 29 per cent to $100.3 million. This marks the first year that KiwiRail hasn't received an annual $90 million operating grant from the government. Instead it receives funding for specific projects.

Recent developments have included the Wellington Regional Rail Plan and Auckland's metro rail and funding rolls off as projects are completed. In the latest year, grant income fell 24 per cent to $344.6 million.

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The annual results come in below the targets set in the railroad company's statement of corporate intent. Operating revenue came in 2.6 per cent under the projected $685 million, while ebitda fell short by about $20 million.

"This was almost entirely due to the impact of the Christchurch earthquakes and loss of Pike River Mine volumes and the provision for restructuring," the company said in its statement. Revenue from freight, its largest operation, was 3.8 per cent under target and Tranz Scenic revenue undershot by 27 per cent.

Overall, freight revenue climbed 8 per cent to $397 million, sales for the Interislander service rose 2.3 per cent to $122.9 million. Tranz Metro revenue rose 4 per cent to $65.5 million, property and corporate rose 5.4 per cent to $31.8 million and network jumped 46 per cent to $20 million.

Mechanical's revenue tumbled 68 per cent to $9 million and Tranz Scenic's fell 24 per cent to $21.5 million.

New Zealand Railway Corp., which trades as KiwiRail, won't pay a dividend.