LONDON - Rail infrastructure firm Network Rail said on Friday its first-half profit rose 4 percent and train punctuality hit a 10-year high, as it strives to meet government demands for expansion and performance improvement.

Network Rail, which swung to its first annual profit last year, said pretax profit rose to 780 million pounds for the six months to September 30, as cost cuts and increased punctuality helped income rise by 3.4 percent to 3 billion pounds.

Train punctuality rose to 90.87 percent during the period, taking 12-month average to 88.8 percent, although it falls short of the government demand for 92.6 percent by 2014.

"We have an objective to get to 90 percent and we think that will happen by the end of our financial year," Chairman Ian McAllister told reporters.

"We always had a dip in autumn because leaves lie on the line. It is very serious problem ... but what we are now seeing is the worst month we had ... is now higher than the peak when we took over. So punctuality has moved up very dramatically and we are very confident to meet the objective."

In its strategic business plan announced on November 1, Network Rail said it could reach 91.6 percent punctuality by 2014 in England and Wales, just short of the government's aspiration. It said at the time it would need a further 400 million pounds to do any better.

The state-backed firm, which took over the running of the rail network from the failed Railtrack in 2002, has been battling to turn around a rail system which suffered from years of under-investment and has a troubled history of accidents, escalating costs and delays.

It is now entering a phase of expansion to deal with overcrowding as passenger numbers rose to a 60-year high and freight use jumped more than 50 percent in the last 10 years.

The firm gets about 4 billion pounds a year in government subsidies and does not distribute its profits to shareholders but uses them to reinvest in the railway or reduce debt.

The government said in July it wanted to spend over 10 billion pounds on expanding the rail system, including adding 1,300 extra carriages to reduce crowding.

Network Rail's major investment projects include a 5.5 billion pound upgrade of the Thameslink line across London and the redevelopment of Edinburgh's Waverley station.

It said the group is also making good progress on meeting the regulators' target of a 31 percent cut in costs over a five-year period, after taking 1.7 billion pounds, or 26 percent out of operation and maintenance cost in the past three years.