Aurizon Holdings Ltd. (AZJ.AU) said an impairment charge against its bulk commodities unit had driven it to an annual loss, but it would seek to bolster investor returns by buying back shares.
Aurizon reported a net loss of 188 million Australian dollars (US$148.4 million) for the 12 months through June, swinging from a profit of A$72 million a year earlier. The result was dragged down by A$927 million in impairment charges and costs tied to a business overhaul, including a A$526 million writedown of the bulk business after conditions worsened in the second half of its financial year.
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Also Monday, Aurizon said it planned to buy back shares worth around A$300 million using surplus capital. That would represent approximately 3% of the company's shares on issue if completed in full.
Underlying earnings before interest and tax fell 4% at A$836 million, within guidance for between A$800 million and A$850 million provided in mid-April. The company declared a final dividend of 8.9 Australian cents a share, down from 13.3 cents a year earlier.
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SYDNEY--Aurizon Holdings Ltd. (AZJ.AU) said it would exit the intermodal freight business and buy back shares to bolster investor returns, after an impairment charge against its bulk commodities unit drove it to an annual loss.
Aurizon is selling its Queensland Intermodal business to Linfox and Pacific National and had agreed to a separate deal to sell its Acacia Ridge Intermodal Terminal to Pacific National, concluding a strategic review triggered by several years of losses. It said the combined value of the two deals was 220 million Australian dollars (US$173.6 million).
The intermodal freight business moves goods via rail and road on behalf of retailers, wholesalers and freight forwarders. Aurizon said the remaining intermodal freight businesses outside of eastern Australia's Queensland state would be sold, affecting around 250 employees.
"Exiting the business will allow the company to focus on core, profitable parts of the Aurizon portfolio including the ability to recycle capital into other growing parts of our business," said Chief Executive Andrew Harding.
Aurizon's plan to exit the intermodal freight business was outlined alongside a net loss of A$188 million for the 12 months through June. The result was dragged down by A$927 million in impairment charges and costs tied to a business overhaul, including a A$526 million writedown of the bulk business after conditions worsened in the second half of its financial year. The company had reported a A$72 million net profit in the 2016 fiscal year.
However, Aurizon offered some positive news for shareholders: an expected rebound in underlying earnings in the 2018 fiscal year and plans to buy back stock worth A$300 million using surplus capital, or approximately 3% of the company's shares on issue.
Headwinds buffeting the company strengthened in late March when Cyclone Debbie tore through Queensland, damaging several of Aurizon's rail lines and forcing mining companies to stockpile coal at pits because they had no way to move the commodity to port.
Aurizon said it hauled 198.2 million tons of coal during the year, in line with revised guidance of between 190 million and 200 million tons provided in April as it assessed the impact of Cyclone Debbie, including to the Goonyella rail network used by BHP Billiton Ltd. (BHP.AU). Management had originally expected to ship up to 212 million tons of coal.
Annual underlying earnings before interest and tax--or ebit--fell 4% at A$836 million, within guidance for between A$800 million and A$850 million provided in mid-April.
However, Mr. Harding said on Monday that underlying ebit should recover to between A$900 million and A$960 million in the 2018 fiscal year, excluding the impact of the sale and closure of its intermodal freight business. The company also expects to haul between 215 million tons and 225 million tons of coal, assuming no change in market conditions.
Aurizon declared a final dividend of 8.9 Australian cents a share, down from 13.3 cents a year earlier. That brought the total payout for the year to 22.5 cents.
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(END) Dow Jones Newswires
August 13, 2017 19:16 ET (23:16 GMT)