Aurizon FY22 profits down on back of east coast floods

Flooding on Australia’s east coast through the first half underpinned a -15% fall in Aurizon Holdings’ (ASX:AZJ) full year result.

Disruptions caused by covid and global supply chain inflation also had an impact, but, shareholders will note floods is the one thing Aurizon’s full year reports keep coming back to. 

As for next year, the company offers its outlook of earnings (EBITDA) between $1.47bn and $1.55bn. Capital expenditure is estimated to reach a potential upper range of $550m. 

Aurizon’s earnings were in line with Bloomberg estimates; Morgans has given Aurizon an ‘add’ rating.

Here’s a quick overview: 

• Revenue: $3.075bn (up 2%)

• EBITDA: $1.46bn (down -1%)

• NPAT: $513m (down -15%)

• Cash: $663m (up 13%)

• Dividend: 21.4c (100% franked) 

Coal still a moneymaker as floods persist

While the world begins returning to coal-fired power plants in 2022, Aurizon saw its coal division deliver earnings (EBITDA) 1% higher than last year’s. 

This occurred even as total tonnage transported was lower than last year by -4%. A number of ten-year haulage contracts were executed between Aurizon Coal and various entities in the last twelve months. 

Its rail network business, meanwhile, saw earnings (EBITDA) down -6% compared to last year; revenue down -3%, and lower volumes across the board. 

The answer: “wet weather,” according to CEO Andrew Harding.

More to come?

The wet weather in question is actually several large flood disaster events that hit the Australian east coast this year, largely attributed to climate change, and possibly not over yet.

Perhaps this is why chairman Tim Poole spent a decent part of his report discussing environmental outcomes. 

“We know rail is already the lowest-carbon solution for bulk freight [and] rapidly developing battery and hydrogen technology offers an exciting opportunity,” Poole noted. 

“A range of initiatives are underway to reduce our carbon footprint.” 

The upside to wet weather?: grain haulage for CBH is to continue through FY23. Of course, profits are still down -15%.