The railway owner must make £1.1bn in efficiency gains by 2014.
Maintenance costs alone were reduced by 7% or £86m on a like for like basis, through tight cost controls and productivity improvements, said the railway owner.
Overall operating costs rose, nonetheless, from £3.62bn to £3.69bn due to higher staffing costs.
Despite big savings the rail regulator said yesterday that it was still not convinced Network Rail would meet an efficiency target of 21% lower costs by 2014.
The Office of Rail Regulation also warned that a mixed performance last year, including three rail worker fatalities, should be taken into account when board bonuses are announced at the end of this month.
Announcing end of year results, chief executive Iain Coucher said: “In a more austere spending environment it is vital that Network Rail continues to drive down costs and make further efficiency savings.
“A strong start has been made in 2009/10 in delivering against our targets but we must and we will work harder and faster in the coming years.”
Overall capital spending fell from £4.7bn to £3.9bn last year.
Profits at Network Rail have fallen by almost 75% over the past year to £395m but the company said more trains ran on time.