KiwiRail says it will decide by the end of the year whether to close poorly performing businesses as it aims to lift revenue in 2013.
The state-owned rail company on Wednesday announced its revenue rose more than 7% or $50 million to $716 million, but fell short of the Statement of Corporate Intent targets.
A writedown in its rail assets and restructuring costs contributed to a loss of $2.3 million.
Excluding major one-off items, profit fell 3% to $105 million.
Chief executive Jim Quinn says a 15% growth in its freight business, worth $60 million, offset weakness in its passenger business.
He says the freight business has more growth potential than the passenger and ferry businesses.
Mr Quinn says if KiwiRail is going to get the railway right it must succeed with freight, and all the other businesses must perform to the maximum they can.
He says the ailing tourism industry, combined with the effects of the Christchurch earthquake, dragged down passenger numbers by 14% but he is confident of a turnaround.
Mr Quinn says it is yet to be seen whether the Northern Explorer, relaunched in recent months, will attract the necessary passenger numbers necessary.
He expects the Transalpine to continue to grow as hotel stock in Christchurch continues to increase and as rolling stock is added, while the Coastal Pacific has struggled for some time and is being monitored carefully.
Lower earnings have forced KiwiRail to cut its investment budget over the next three years by $200 million to $750 million.
Mr Quinn says the company will be making some hard decisions to reach revenue and earnings targets.
He did not rule out further job losses, in addition to the 181 positions already being axed with the restructuring of the infrastructure and engineering divisions.