Aurizon reports growth and tough times ahead

Aurizon welcomes positive year and says it will tackle an upcoming flat period with cost saving measures

Aurizon reports growth and tough times ahead
Aurizon predicts haulage numbers to flatten.


Rail operator Aurizon has announced a 14 per cent increase in underlying earnings before interest and tax (EBIT) for the financial year ending June 30, resulting in a 64 per cent final dividend jump on 2014.

While revenue remained at $3.8 billion over the 12 month period, Aurizon’s EBIT rose from $851 million in 2014 to $970 million this year.

The company’s statutory net profit after tax was also positive, increasing 139 per cent to $604 million on the back of its asset impairments and voluntary redundancy costs in 2014.

"Today, Aurizon has reported the achievement of its core financial target, the 75% [operating ratio] by FY15," Aurizon managing director and CEO Lance Hockridge says.

"Since IPO we have delivered a strong improvement in our profit margin, on far lower rail volumes and revenue than initially forecast, through a disciplined program of cost reduction and productivity improvements.

"Over the past two years, we've delivered cumulative transformation benefits valued at more than a quarter of a billion dollars, as committed to the market," he says.

"We've hauled 6% more in above rail tonnages with 13% less people and 17% less locomotives, and delivered major growth projects on time and on budget."

After restructuring the Queensland enterprise agreements concerning 5,000 of its 6,800 employees, Aurizon’s CEO is bullish for the company’s upcoming performance.

"The catalyst for the next phase of transformation in the Company is new enterprise agreements covering employees in Queensland, which will provide us with productivity enhancements, operational flexibility and cost reductions," Hockridge says.

"After two years of protracted negotiations, we're pleased to be moving towards modern workplace agreements across our national operations."

"Pending formal Fair Work Commission approval, new agreements should be in place within weeks."

The company hopes the corporate changes, which commenced in July, will provide an additional $43 million in savings and allow it to meet its $100 million cost reduction goal by the end of 2016’s financial year.

When predicting the rail haulage for 2016, Aurizon isn’t as positive.

On current market conditions, the company believes the numbers will remain flat, with coal in the range of 210-220mt, iron ore at 24mt and freight volumes at 45mt.

Despite this, the company says it is committed to reducing its operating ratio to 73 per cent by 2016, 71.5 per cent by 2017 and 70 per cent by 2018.


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