Aurizon On Track With Higher Dividend, Profit Lift

By Glenn Dyer | More Articles by Glenn Dyer

Queensland-based railroad group, Aurizon has boosted final dividend despite forecasts of a weak performance for 2020-21.

The company reported a full-year underlying profit of $531 million and will reward shareholders with a higher dividend and a new $300 million share buyback.

The higher final dividend and new buyback will help distract attention from the forecast for a weak 2020-21 which will in part be driven by a fall in demand for coal and weak coal prices.

Aurizon will pay a final dividend of 13.7 cents, 70% franked, up on last year’s final dividend of 12.4 cents. That takes the total for the year to 27.4 cents a share or 100% of after-tax profit (for the 5th year in a row).

The company forecast a lower EBIT for the new financial year, in the range of $830 million-$880 million.

The forecast range is under the $909 EBIT reported for 2019-20 and is based on flat volumes for coal transport for the year ahead, in the range of 210-220 million tonnes, due to the impact of COVID-19 on world demand for steel (which outside China, is already running 30% lower than a year ago).

Aurizon said the higher 2019-20 performance was based on new contracts, solid tonnages in its coal and network business, and no significant impact on its volumes from COVID-19.

“Despite the emergence of COVID-19 in the second half of the financial year 2020, the company has delivered a solid operational and financial performance with no material impact as a result of the pandemic,” said chief executive Andrew Harding.

The company’s statutory profit rose 28% to $605 million for the year, which included the sale of the group’s rail grinding business.

Total revenue rose 5% to $3.065 billion.

The shares rose 2.2% to $4.65.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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