The Courier-Mail

Virus risk to coal de­mand

Aur­i­zon warns of soft­en­ing ex­port signs

- GLEN NOR­RIS Business · Finance · Australia News · Brisbane · Asia · Australia · Glencore International · Queensland · New South Wales · China · India · Aurizon

QUEENS­LAND rail gi­ant Aur­i­zon has warned the COVID-19 pan­demic will curb de­mand for Aus­tralian coal.

Bris­bane-based Aur­i­zon’s net profit rose 28 per cent to $605m for the year to June 30 on the back of a 5 per cent in­crease in rev­enue to $3.06bn.

Un­der­ly­ing earn­ings be­fore in­ter­est and tax (EBIT) rose 10 per cent to $909m but Aur­i­zon flagged un­der­ly­ing earn­ings would fall to $830m to $880m in the cur­rent fi­nan­cial year.

Aur­i­zon chief ex­ec­u­tive An­drew Hard­ing said de­mand for coal was ex­pected to soften during 2021 due to COVID-19 es­pe­cially for met­al­lur­gi­cal coal shipped to Asia.

“There is a ter­ri­ble short im­pact of COVID on the steel in­dus­try but we do see it as tem­po­rary,” said Mr Hard­ing.

“You will see soft pro­duc­tion ex­port from Aus­tralia though the first half and we are see­ing signs of that al­ready.”

Min­ing gi­ant Glen­core last week an­nounced that it would tem­po­rar­ily shut its Queens­land and NSW coal mines due to tepid de­mand and a slump in prices. Aur­i­zon’s coal busi­ness de­liv­ered 214 mil­lion tonnes of coal for cus­tomers during the 2020 fi­nan­cial year, which was broadly in line with the pre­vi­ous 12 months.

But vol­umes are ex­pected to range be­tween 210Mt to 220Mt for the cur­rent year.

Aur­i­zon chief fi­nan­cial of­fi­cer Ge­orge Lip­pi­att said China and In­dia were the two most im­por­tant mar­kets for steel de­mand for Aus­tralian coal ex­ports.

He said Chinese steel pro­duc­tion in­creased 4 per cent in the 2020 fi­nan­cial year.

“We see that con­tin­u­ing, how­ever what we have seen off­set­ting that is re­duc­tions in In­dia,” Mr Lip­pi­att said.

Mr Hard­ing said Aur­i­zon had ben­e­fited during the pan­demic from hav­ing a de­cen­tralised work­force. He said 80 per cent of Aur­i­zon’s staff worked in re­gional ar­eas.

Aur­i­zon will em­bark on a new $300m shares buy­back this fi­nan­cial year af­ter com­plet­ing a $400m buy­back last year. It will pay a fi­nal div­i­dend of 13.7c per share, up 10 per cent from a year ago, with the to­tal div­i­dend at 27.4c.

Aur­i­zon shares closed up 10c, or 2.2 per cent, at $4.65.

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