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.
