Aurizon share price up even as FY19 sales, profits and dividend drop

Though Aurizon faced a number of difficulties in 2019, the rail freight operator is now guiding for a significantly stronger 2020.

Even though Aurizon Holdings Ltd (ASX: AZJ) reported declines across both the top and bottom line – the company’s share price still rose as much as 3.4% today.

Centrally, although tough operating conditions impacted the rail freight company this year, Aurizon has guided for a much stronger FY20.

Here’s everything you need to know about Aurizon’s 2019 results:

2019 financials turn red

When Aurizon Holdings Ltd (ASX: AZJ) released its 2019 full-year results today, it reported declines across its top and bottom-line, as well as a lower final dividend for 2019.

On the basis of revenue, Aurizon reported sales of A$2.9 billion, down some 9%, year-over-year.

This outcome – though disappointing on the face of it – was largely a result of Cleveland-Cliffs shutting down their Western Australian mining operations earlier this year.

Indeed, as the company pointed out, excluding the impact of the Cliffs closure, Aurizon sales were 'higher with new growth volumes offset in part by lower grain and the impact from North Queensland flooding in' the second half of 2019.’

Underlying earnings before interest and taxation (EBIT) also took a hit in 2019 – declining 12% overall – as all of Aurizon’s core business segments struggled.

Bulk and network business segments both declined, seeing their EBIT fall 26% and 17%, respectively. As with overall revenue, Bulk’s precipitous decline was largely attributable to the cessation of the Cleveland-Cliffs operation.

Aurizon dividend lower

Adding to these declines, the rail freight company also reported that the final dividend per share for the 2019 financial year would come in at 12.4 cents, around 5% lower than the dividend from the year prior.

Positive at least, this result is ‘based on 100% payout ratio of underlying continuing profits after tax.’

Share price rises, buy backs continue

Ultimately this was a tough year for Aurizon Holdings Ltd (ASX: AZJ) – as regulatory issues persisted, and the closure of Cleveland-Cliffs weighed on the company’s fundamentals.

In addition to this, though the financial results discussed above will likely disappoint some investors, there were a number of positive forward-looking statements made in the company’s 2019 financial report.

For one, the company reported that it is committed to an on-market share buy-back up to A$300 million in the 2020 financial year.

This development, though consistent with Aurizon’s previous buy-back practices, still likely contributed to the share price rise we saw in early morning trade.

Additionally, the company guided for impressive group EBIT figures of between A$880 million to A$930 million.

This guidance – on the lower and upper ranges – implies an earnings increase of 6% and 12% in FY20, respectively.

Year-to-date, Aurizon Holdings Ltd has seen its share price outpace the ASX 200 benchmark by a good margin – rising 37%.


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