Aurizon Shares Up on Earnings

What happened to Aurizon share price?

Aurizon [ASX:AJZ] is Australia’s largest freight operator, with a focus on commodity transportation.
The AU$9 billion logistics company is up almost 4% on open today, after an encouraging half-year report was released highlighting an interim increase in net profit of 52%.

This was issued alongside a notice that a shareholder dividend of 14 cents would be paid on 26 March this year. The payment will be an increase from 13.6 cents a year ago.

The company advised investors that key priorities are on track to be met. These include the AU$300 million share buy-back with an expected completion date to be in 2HFY2018, and AU$302 million transformation delivered to date, on track to reach AU$380 million.

Taking aim

Aurizon lashed out at the Queensland Competition Authority (QCA) in regards to its draft decision to allow Aurizon to earn around AU$1 billion less than the company estimates it should from its networks business from mid-2017 to 2021. Aurizon advises this reduction will translate to a lowering of earnings before interest, taxes, depreciation and amortisation (EBITDA) by AU$100 million annually. Around 30% of the group’s revenues are generated by these fees it charges miners to access rail tracks.

Further, Aurizon advised that credit metrics would fall below the BBB+ threshold under the regulatory cash flows expected as a result of QCA’s UT5 Draft Decision.

It’s important to note that Aurizon’s total recordable injury frequency rates are down 10% from Q1 to Q2FY2018. This is an encouraging sign that the company is meeting the goals set in line with its core values.

Earnings guidance for the full year remain unchanged, with a forecast EBIT of AU$900–960 million.

Regards,

Ryan Dinse,

For Money Morning 

and

Jack Cameron,

Junior Analyst, Money Morning

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Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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