Aurizon, Australia’s largest rail freight operator, has dropped into a loss as tonnages and revenue decline.
The result was a negative $108 million for the half year to December, down from a $308 million profit, reflecting a 5% fall in freight. The result includes impairment charges of $426 million.
Revenue was down 11% to $1.758 billion.
A short time ago, Aurizon shares were down 1.5% to $3.79.
The company is a significant mover of freight for the mining industry, hit by sharp falls in prices for commodities. Aurizon says iron ore is challenging and long-term growth expectations have slowed for coal.
“Weâ€™re determined to pull every cost and efficiency lever available to us,” says CEO Lance Hockridge.
“Our underlying business is strong and resilient but we need to respond rapidly in a very challenging business environment for our customers.”
Cost cutting delivered $56 million in the first half, a total of $308 million since July 2013.
“Cost reduction and transformation will remain the key drivers of margin growth and shareholder value creation,” says Hockridge.
A dividend was paid based on underlying profit of $237 million, down 23%. The 70% franked interim dividend of 11.3 cents a share is 12% higher than the same six months last year.
The company bought back and cancelled 28.7 million of its shares at a cost of $140 million during the six months.
Aurizon expects full year EBIT (earnings before interest and taxes) in the range of $845 million to $885 million.