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.
“We’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.