Voluntary redundancies of 814 people have contributed to a 10.3 percent drop in profit for freight operator Aurizon
February 20, 2013
Rail haulage operator Aurizon’s first half profit has dropped 10.3 percent following voluntary redundancies of 814 people, flat coal railings and a 3 percent decrease in Queensland volumes.
Aurizon, formerly QR National, today reported its statutory net profit fell to $175.7 million in the six months to December 31, from $196 million in the previous corresponding after payments of $88 million in voluntary redundancies.
Aurizon CEO Lance Hockridge says the company’s business reform program, which included the redundancies, has delivered $28 million in cost efficiencies, productivity improvements and coal revenue quality in the first half.
“We expect these benefits to increase in the second half of this year,” Hockridge says.
Underlying earnings before interest and tax (EBIT) rose 36 percent to $356 million compared to $261 million in the prior corresponding period.
Revenue for the half year was $1.9 billion, a 9 percent rise compared to $1.7 billion in the in six months ending December 31.
According to Aurizon, the result was achieved despite flat coal railings of 97 million tonnes.
Volumes in Queensland also decreased 3 percent on the prior half-year,
but were offset by a 15 percent increase in New South Wales coal volumes.
Aurizon attributed the improvement in EBIT to an 89 percent increase in iron ore volumes in Western Australia, which boosted iron ore haulage revenue by $99 million, and access revenue from the network business in Queensland.
There was a material improvement in return on invested capital (ROIC) from 4.8 percent to 7.5 percent, which Aurizon credits to growth in earnings and improvements in capital efficiency, driven by continuing productivity and operational improvements.
Hockridge says the improvement in underlying company earnings reflects the ongoing progress implementing Aurizon’s reform and growth strategy.
He says increased focus on customers and marked improvement in service capability since privatisation has resulted in the announcement of a number of new and renewed coal haulage contracts since July 2012.
These contracts include contracts with Whitehaven, Rio Tinto,
Jellinbah, and Cockatoo Coal.
“These contracts have been negotiated under more favourable commercial terms than current legacy arrangements and provide significant growth for Aurizon well into the next decade,” he says.
Capital investment during the half-year totalled $499 million, with the company continuing to advance its program of major growth projects in Queensland, Western Australia, and New South Wales.
These projects include the Wiggins Island and Hay Point expansions, commissioning of the Esperance facility, the Narngulu East facility near Geraldton, and the Hunter Valley rollingstock and Hexham maintenance facility.
According to Aurizon, expansions in Queensland will deliver an extra 76 million tonnes per annum of rail capacity by 2015 to the Central Queensland coal network, taking total capacity to more than 300 million tonnes of coal per annum.
Aurizon reports it will also continue to evaluate other longer-term rail infrastructure and haulage opportunities, including the Galilee and Surat Basins and in Western Australia’s Pilbara.