A thumbs down from the market to rail group Aurizon's (ASX:AZJ) 2023-24 financial report and outlook for the coming year. The shares traded down more than 8% during Monday trading, despite a result that showed the company benefited from the lack of a La Niña's big wet.
There were higher shipments, revenues, and profits from Aurizon's core coal transport operations in NSW and central Queensland in the year to the end of June. The company—like the coal industry—has had to cope with record rain, widespread flooding, track problems, port problems, the lingering impact of COVID-19, as well as the now lifted bans on Australian coal from China.
China is now a swing buyer for many coal exporters, though at the moment it is buying thermal coal in particular at record levels as it suffers a big heatwave in parts of the east of the country. Coal prices have fallen for its customers but remain high enough to keep coal flowing through the rail networks in both states.
The improvement in weather and rail movement figures saw higher revenues, profits, dividends, and a $150 million share buyback. CEO Andrew Harding said in the results statement that "Aurizon has delivered a strong result in FY2024, with solid earnings growth and strong free cash flow." "This has provided the opportunity for increased shareholder returns, with total dividends for FY2024 increasing by 13% compared to FY2023. We are also pleased to announce a share buyback of up to $150 million."
Revenue rose 9% to $3.844 billion, earnings were up 11% on a net after-tax basis to $406 million and 20% on an EBIT basis, and the total dividend for the year is up 13% at 17 cents a share after a final of 7.3 cents a share, which was down slightly from the final for 2022-23 and the interim of 9.7 cents a share.
Aurizon said its Coal EBITDA (mostly in NSW) was $528 million, up 16% compared to 2022-23, primarily driven by higher volumes and elevated revenue yield (customer/corridor mix and indexation). Volumes hauled of 189.0 million tonnes were 2% higher than FY2023.
Bulk EBITDA was $229 million, up 7% compared to 2022-23. Volumes hauled of 66.6 million tonnes were down by 2% compared to the previous corresponding period. This was mainly due to customer production issues primarily in Queensland, lower grain volumes, and the cessation of a rail maintenance contract.
Network EBITDA was $930 million, up 14% compared to 2022-23. This was driven by an increase in allowable revenue due to the preliminary reset of WACC (Weighted Average Cost of Capital) and a higher asset base. Tonnes carried over the Central Queensland Coal Network were 209.6 million, 1% higher than FY2023.
The company reported EBITDA for the 2023-24 year of $1.624 billion, up 14%, and management sees that rising modestly to a range of $1.660 billion to $1.740 billion.
But the shares failed to respond positively to the financial report or the outlook, which seems to have been a bit light on.
