Aurizon Reports 4% EBITDA Decline to $814M Despite 6% Coal Volume Growth
Aurizon’s half-year FY2025 results reveal a 4% EBITDA decline despite a 6% increase in coal volumes, alongside mixed safety outcomes and an extended $300 million buy-back program.
- EBITDA down 4% to $814 million despite 6% coal volume growth
- Interim dividend declared at 9.2 cents per share, 60% franked
- Safety metrics show 29% improvement in serious injuries but 9% rise in total recordable injuries
- On-market buy-back extended to $300 million with 92% completed
- FY2025 EBITDA and capex guidance maintained but expected at lower range
Financial Performance and Market Context
Aurizon Holdings Limited reported its half-year results for FY2025, posting an EBITDA of $814 million, a 4% decrease compared to the prior corresponding period. This decline comes despite a notable 6% increase in coal volumes, underscoring the complex interplay between volume growth and margin pressures within the company’s core operations.
The company’s Network segment showed resilience with a $9 million EBITDA increase to $495 million, driven by regulatory revenue uplifts. However, this was offset by reduced external construction work and rising maintenance costs. Coal segment EBITDA fell by $19 million to $264 million, impacted by a shift in customer mix and higher operating expenses, despite volume gains. Bulk freight EBITDA declined by $28 million, affected by lower grain railings, contract cessations, and operational disruptions including a derailment in Western Australia.
Dividend and Capital Management
Reflecting confidence in its cash flow, Aurizon declared an interim dividend of 9.2 cents per share, 60% franked, representing 80% of underlying net profit after tax. The company also extended its on-market buy-back program by an additional $50 million, bringing the total to $300 million. As of mid-February 2025, 92% of this buy-back had been completed, resulting in the cancellation of over 67 million shares, a move likely to support shareholder value amid earnings pressures.
Safety Performance: Mixed Signals
Aurizon’s safety metrics presented a mixed picture. The Actual and Potential Serious Injury and Fatality Frequency Rate improved significantly by 29%, a positive development for operational risk management. Conversely, the Total Recordable Injury Frequency Rate deteriorated by 9%, highlighting ongoing challenges in workplace safety. The company also reported a tragic fatality in December 2024 involving a locomotive driver, an incident currently under investigation.
Strategic Initiatives and Outlook
CEO Andrew Harding emphasized the strength of Aurizon’s Network and Coal businesses, which remain well-positioned to benefit from sustained global demand for Australian coal, particularly from India. The company is leveraging strong cash flows to invest in growth areas such as Bulk and Containerised Freight, including the strategic Tarcoola-to-Darwin rail line acquisition and a land-bridging initiative with global shipping line ANL.
In response to market pressures, Aurizon is implementing cost and fleet optimizations in its Bulk freight operations and reviewing its non-operational cost base to enhance efficiency. A capital and network ownership structure review is also underway, with outcomes expected later in 2025.
Looking ahead, Aurizon maintains its FY2025 guidance for underlying EBITDA and capital expenditure but anticipates results toward the lower end of these ranges. Early second-half volumes show some softness, particularly in Network and Coal segments, suggesting cautious market conditions.
Bottom Line?
Aurizon’s solid coal volumes and strategic investments face headwinds from margin pressures and safety challenges, setting a cautious tone for the remainder of FY2025.
Questions in the middle?
- How will Aurizon’s ongoing safety challenges impact operational efficiency and regulatory scrutiny?
- What outcomes will the capital and network ownership structure review yield for future growth?
- Can the Bulk and Containerised Freight segments accelerate growth to offset pressures in Coal and Network?
