Rail freight operator Aurizon is selling its troubled intermodal business, cutting another 250 jobs, revealed the financial cost of the impact from Cyclone Debbie and has slashed its final dividend after reporting a bottom line loss of $188 million. But it will run a multi-million dollar buyback this financial year to provide support to the share price.
Shares in the rail group, Aurizon absorbed the news of yet another round of massive impairments and write downs yesterday, with the shares up 0.2% to $5.06, leaving them lower than when they started 2017 at $5.12.
Morgans is more confident in the outlook for the regulated network after the briefing. However, concerns continue regarding competitive pressures above rail. With the revenue allowance for operating costs fixed until FY27 for the UT5 agreement, management was upbeat about the cost-cutting potential.
Aurizon has announced a new 10-year commercial agreement with its coal mine customers for pricing its Queensland network. If agreed to by the regulator, this will replace some parts of the four-year UT5 regulatory decision.
First-half results revealed a decline in earnings from continuing operations of -16%. Citi forecasts underlying EBIT for the non-network business towards the midpoint of management's guidance range of $390-430m.