Aurizon prepares for G&W arrival, and 2019/2020 Half Year Results

 
  Sulla1 Chief Commissioner

A thorough analysis of Aurizon's Half Year Results and the upcoming arrival of G&W in Queensland from the Australian Financial Review...

https://www.afr.com/companies/infrastructure/aurizon-sharpens-up-for-g-and-w-s-arrival-in-queensland-20200207-p53yvw?fbclid=IwAR0ttldDtNNpbEz5DbQJMPTcptR6ijqhKwLH7SIuWE0sUF0-PE0jIaLXeKc



Aurizon sharpens up for G&W's arrival in Queensland – Australian Financial Review

“Jenny Wiggins
Infrastructure Reporter
Feb 10, 2020 — 9.13am

KEY POINTS
Half-year Revenue ($m) 1528.8 , up 5.3%
Pre-tax profit ($m) 489.6 , up 50.6%
Net profit ($m) 342.7 , up 51.0%
Interim dividend (c) 13.7 , up 20.2%

Aurizon is cutting costs and lengthening contract terms as it prepares for competition from US railways giant Genesee & Wyoming in Queensland, and weaker coal haulage volumes.

"There are a number of market rumours ... that would suggest that G&W are coming into the Queensland market," Aurizon chief executive Andrew Harding told The Australian Financial Review.

"Part of our strategic response to that is to extend the duration of our contracts at market rates and then manage our costs."

Aurizon CEO Andrew Harding says the rail group needs to keep cutting costs.

G&W Australia, which operates rail networks in South Australia, NSW and the Northern Territory and is being acquired by Brookfield Infrastructure and Singaporean sovereign wealth fund GIC, has been advertising for train drivers to be part of a team "responsible for entering and growing GWA’s operations in Queensland".

Aurizon is the dominant rail haulage provider in Queensland, controlling about two-thirds of the market, with Pacific National managing the remainder, but has been forced to lower prices when renewing contracts to keep its market share.

Aurizon executives said they were not aware that G&W had yet won any contracts in Queensland.

Aurizon is already taking a tough stand with G&W, last year alleging  in a lawsuit that the US company breached existing agreements when it arranged to sell its Australian rail assets to Macquarie Infrastructure and Real Assets and Dutch pension fund PGGM last year after its $US8.4 billion sale to Brookfield and GIC.

Mr Harding declined to comment on the ongoing legal action.

Aurizon's shares, which have risen 20 per cent over the past 12 months, closed up 14¢, or 2.6 per cent, at $5.47 on Monday after it delivered a 51 per cent rise in net profit to $343 million and boosted an existing share buyback by $100 million to $400 million.

Profits were helped by a $105.4 million net gain on the sale of its rail grinding business but its bulk business also performed better than analysts' anticipated with earnings trebling to $43.7 million.

But total coal volumes were lower than expected in the six months to December, running flat at 106 million tonnes. Volumes were stronger in NSW and south-east Queensland, but fell 3 per cent in central Queensland.

Mr Harding said the drop was mostly due to customer-specific issues such as BHP's planned wash plant shutdowns and Whitehaven Coal's staff shortages, but warned of "limited" growth in coal haulage revenues over the next three years.

Aurizon has lowered its full-year coal haulage forecasts to between 210 million and 220 million tonnes, a drop from its previous estimate of 220 million to 230 million tonnes.

Earnings before interest and tax (EBIT) from the coal business dropped 2 per cent to $205.8 million after Aurizon invested in training and maintenance activities to support expected volume increases in the first half of the year that failed to eventuate.

John Manning, a senior credit analyst at Moody's Investors Service, said Aurizon's exposure to the environmental, social and governance risks related to coal exports were growing as more investors screened companies, but should be manageable as the company prepares to refinance some $520 million in debt later this year.

Aurizon gets about 80 per cent of its revenues from coal-related activities, with about 42 per cent derived from hauling thermal coal.

Mr Harding declined to comment on whether the federal government should set fixed targets for zero carbon emissions, but said Aurizon recognised climate change as a science and was working on a multi-year project to further reduce its carbon footprint.

BlackRock, the world's biggest fund manager, said in January that it was selling more than half-a-billion dollars in stock held in companies that produce thermal coal, but lifted its holdings in Aurizon to 7.2 per cent, from 6.2 per cent.

BlackRock is only divesting shares held in thermal coal producers which it defines as companies that derive more than 25 per cent of their revenues from thermal coal production.

Earnings from Aurizon's network business, which makes money from providing access to rail tracks, rose 14 per cent to $232.2 million after Queensland regulators approved a new access undertaking.

Aurizon will pay a 13.7¢ interim dividend - up 20 per cent from the year-earlier payout. It reaffirmed its full-year guidance for group EBIT of between $880 million and $930 million.”


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  bingley hall Minister for Railways

Location: Last train to Skaville
G&W Australia, which operates rail networks in South Australia, NSW and the Northern Territory and is being acquired by Brookfield Infrastructure and Singaporean sovereign wealth fund GIC, has been advertising for train drivers to be part of a team "responsible for entering and growing GWA’s operations in Queensland".

Aurizon is already taking a tough stand with G&W, last year alleging in a lawsuit that the US company breached existing agreements when it arranged to sell its Australian rail assets to Macquarie Infrastructure and Real Assets and Dutch pension fund PGGM last year after its $US8.4 billion sale to Brookfield and GIC.
The AFR


So which is it Razz
  BrentonGolding Chief Commissioner

Location: Maldon Junction
G&W Australia, which operates rail networks in South Australia, NSW and the Northern Territory and is being acquired by Brookfield Infrastructure and Singaporean sovereign wealth fund GIC, has been advertising for train drivers to be part of a team "responsible for entering and growing GWA’s operations in Queensland".

Aurizon is already taking a tough stand with G&W, last year alleging in a lawsuit that the US company breached existing agreements when it arranged to sell its Australian rail assets to Macquarie Infrastructure and Real Assets and Dutch pension fund PGGM last year after its $US8.4 billion sale to Brookfield and GIC.


So which is it Razz
bingley hall
Wasn't it both? Cool

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