Coal shipments fuel return to black for Aurizon
RAIL giant Aurizon returned to profit amid rising Asian demand for coal but has warned its bottom line continues to be affected by a dispute with the Queensland competition authority.
Brisbane-based Aurizon yesterday said net profit for the year ended June 30 was $560 million, compared to a loss of $37 million in 2017. Revenue dropped 1 per cent to $3.1 billion.
Last year’s result was dragged down by $927 million in impairment charges and costs tied to a business overhaul, including the closure of its intermodal business at Acacia Ridge.
Aurizon chief executive Andrew Harding said the return to profit had been helped by new coal shipment contracts in Queensland and NSW. Coal volumes had increased 7 per cent to 212.4 million tonnes.
“This reflects the prior year impact of Cyclone Debbie, the start of new contracts and strong Asian demand for Queensland coal,” Mr Harding said. Across the network, 229.6 million tonnes of coal was carried.
But Mr Harding said an extra 7-8 million tonnes would have been shipped if the Queensland Competition Authority (QCA) had not proposed placing uncommercial restrictions on what Aurizon could earn from operating its railway across the state.
The QCA has stipulated the company could earn maximum revenue of $3.893 billion from operating its monopoly rail network over the next four years.
Aurizon says that figure is not enough to maintain the network and in response has moved to reduce flexible maintenance schedules, meaning less coal can be carried.
“This has been a forgone economic opportunity and one that could have been avoided,” said Mr Harding. “We remain absolutely committed to trying to reach a fairer and commercially appropriate outcome. Customers are keen to ensure that what is a broken system is fixed for the long term.”
The company’s plans to sell its loss-making intermodal business and Acacia Ridge terminal also have hit a regulatory snag, with the Australian Competition and Consumer Commission blocking the sale to Pacific National.
The Federal Court yesterday ordered that Aurizon must continue operating its Queensland intermodal business while the ACCC’s case is being determined.
Burrell Stockbroking senior research analyst Bruce McLeary said Aurizon’s result had been helped by strong coal prices but regulatory issues, including the ACCC challenge to the sale of the intermodal business, continued to cloud prospects.
“The company is not giving any guidance as to how, or when, these issues will be resolved,” said Mr McLeary. The company declared a final dividend of 13.1c per share, a 47 per cent increase on the previous year.
Aurizon shares higher at $4.48. closed
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