Aurizon (ASX:AZJ), the leading integrated rail provider in Australia, unveiled its progress and growth opportunities during an Investor Day event held in Darwin. The presentation highlighted the company's strategic execution, business performance, and its potential for expansion in the Bulk and Containerised Freight markets.
Aurizon provided insights into its earnings outlook for FY2023 and FY2024. The company anticipates that its Group Underlying Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) for FY2023 will fall within the projected range of $1,420 million to $1,470 million. However, due to prolonged wet weather, mine production issues, and labour shortages impacting the March quarter, the earnings are expected to lean towards the lower end of the range.
Furthermore, Aurizon shared its earnings guidance for FY2024, forecasting a Group Underlying EBITDA range of $1,590 million to $1,680 million.
The projections are based on several key assumptions, including revenue and EBITDA growth in the Network segment driven by a $125 million increase in Maximum Allowable Revenue, higher volumes in the Coal segment, and increased revenue and EBITDA in the Bulk segment due to higher volumes and the full integration of Bulk Central.
The company's strategic execution and growth prospects were also discussed during the Investor Day. Aurizon reiterated its strategy to build upon the stable and cash-generative foundation of its existing Network and Coal businesses, with the objective of doubling Bulk's earnings by 2030. While this strategy remains largely unchanged, Aurizon has revised its aspirations in the Bulk segment and introduced a new growth stream in Containerised Freight.
The strategic plan update highlighted the resilience and cash-generating nature of the Network and Coal businesses, which provide a solid foundation to support Aurizon's ambitions for Bulk and Containerised Freight. Following the acquisition of One Rail and the pursuit of additional Bulk growth opportunities, the company now aims to achieve a 25-30 percent market share in the estimated addressable bulk EBITDA market of $1.7 billion by FY2030.
Aurizon also expressed its aspirations to drive volume growth in Containerised Freight to surpass 500,000 TEUs by FY2030. This includes exploring land-bridging solutions that leverage the company's Bulk and Containerised Freight assets and capabilities, including direct rail access to the Port of Darwin.
Additionally, Aurizon highlighted significant opportunities in the global energy transition, capitalising on its footprint in Australian regions that produce new-economy commodities. The company is actively engaged in a research and development program to develop a future locomotive fleet capable of achieving net-zero carbon emissions, powered by batteries and/or hydrogen.
Andrew Harding, Managing Director & CEO of Aurizon, expressed confidence in the company's growth trajectory, attributing it to targeted investments and business expansion. He underscored Aurizon's position as Australia's leading integrated rail provider, strengthened by the acquisition of One Rail in central Australia last year. Harding stated, "With targeted investment and business growth, Aurizon has continued to build upon our position as Australia's leading integrated rail provider. This has been strengthened by our acquisition of One Rail in central Australia in mid-2022."
Harding further emphasised the company's strategic advantages, saying, "Aurizon is well-positioned for continued growth in bulk commodity markets, where we leverage these existing assets to grow the Bulk haulage business and to extend the reach of our Containerised Freight business." He also highlighted the potential of land-bridging solutions, stating, "We see this as a faster and more efficient transport solution for customers currently using shipping directly into major Australian cities."
As the Australian economy continues to grow, Aurizon anticipates increased container imports and domestic container flows. Leveraging its national operational footprint, extensive rolling stock assets, and capabilities, the company is poised for further growth. Harding added, "As the Australian economy grows, container imports as well as domestic container flows will increase. Together with Aurizon's national operational footprint, significant rolling stock assets and capability, this positions the business well for growth."
