Aurizon eyes new commodity growth horizon

Staff reporter

Top image :
Aurizon train carrying mineral sands in South Australia
‘There are more than 250 projects for new-economy commodities in South Australia and the Northern Territory’

The CEO of Australian commodity rail transport company Aurizon Holdings has flagged “major growth opportunities … [from] new-economy commodities” in central Australia after lower coal haulage in FY23 cut earnings despite a 14% year-on-year improvement in overall revenues to A$3.51 billion.

Aurizon boss Andrew Harding said the Bulk Central (formerly One Rail) business acquired last year for $1.4 billion, which contributed its first year of revenue and earnings, had significant capacity to accommodate future growth.

“We see major growth opportunities in central Australia, with 2500km of rail infrastructure and a line that runs directly into the Port of Darwin,” he said.

“There are more than 250 projects for new-economy commodities in South Australia and the Northern Territory, in various stages of exploration and pre-production, including copper, magnetite, phosphate and rare earths.

“Many of these projects sit adjacent to the rail corridor.

“Aurizon is pleased with the product diversification we are achieving across the portfolio as we continue to grow our bulk and containerised freight businesses, with non-coal revenue now comprising 45% of non-network revenue – up 11 percentage points compared [with] FY2022.”

The company reported 37% lower net profit of $324 million for FY23 versus FY22, and 5% lower EBITDA of $1.38 billion for the latest year.

Its coal haulage volumes – a 50-50 mix of thermal and coking coal from central Queensland and New South Wales mines – decreased 5% to 185 million tonnes in FY2023, contributing to a 16% yoy decline in the division’s EBITDA to $455 million.

Bulk tonnes meanwhile climbed 34% yoy to 68Mt, driving division EBITDA up 59% to $214m.

Aurizon said the coal slump was caused by the “impact of prolonged wet weather, a major third-party derailment and mine-specific production issues”.

“It was a challenging operating environment for the business in FY2023, with prolonged wet weather significantly impacting volumes and earnings,” Harding said.

“We saw an uptick in coal [plus-2%] and network [9%] volumes in the June quarter, which gives us confidence in an improved outlook for FY2024.”

Aurizon is forecasting FY24 EBITDA of $1.59-1.68 billion.

FY24 sustaining capital expenditure has been estimated at $600-660m, and growth capex at $250-300m.

The company’s share price has dropped about 10% in the past month to A$3.59, capitalising Aurizon at circa-$6.6 billion.


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