But the net debt for the not-for-dividend company, which has no shareholders, rose from £18.4 billion in 2006/07 to £19.7 billion in the 12 months ending March 2008, according to today's preliminary results.
The after-tax profit figure for 2007/08 was up from £1 billion recorded in the previous 12 months.
Turnover last year was £5.96 billion - an increase of £165 million on the previous year, while operating profit increased from £2.3 billion to £2.4 billion.
Announcing the results Network Rail chairman Sir Ian McAllister said: "Overall, the last year has been a good one for Network Rail and the industry as a whole, with passengers seeing a better service.
"Train performance is at an all-time high, a £4 billion investment programme has been delivered, delays caused by the infrastructure have been cut and costs have also been reduced.
"Lessons have been learnt following the engineering overrun. Changes have been made to make the planning and execution of such big improvement schemes more robust.
Today's figures come the day after the ORR published draft proposals requiring the rail operator to improve its efficiency and train punctuality within a financial framework which is more than £3 billion less than NR had asked for for the 2009-14 period.
The ORR is also keen for Network Rail to reduce weekend engineering work and the impact that has on passengers to a minimum.
Network Rail has not yet said whether its executives would be receiving bonuses this year. These are dependent on the company's performance.
Although it cannot control the bonuses, the ORR has written to the Network Rail remuneration committee pointing out that performance in some aspects has failed during 2007/08.