Aurizon Reports 3% Revenue Rise, 14% Drop in Underlying NPAT in FY2025 Half-Year

Overview of Aurizon’s 1HFY2025 Performance

Aurizon Holdings Limited, Australia’s largest freight rail operator, released its half-year results for FY2025 showing a mixed performance. The company posted a 3% increase in revenue to $2.02 billion, primarily driven by higher coal volumes and contract rate indexation. However, underlying net profit after tax (NPAT) declined by 14% to $205 million, reflecting margin pressures from customer mix and escalating operating costs.

Statutory EBITDA remained flat at $851 million, supported by a $37 million pre-tax gain from the settlement of legal matters. Despite the earnings pressure, Aurizon’s free cash flow (post-growth capex) rose 23% to $237 million, underpinning a $50 million extension to its on-market share buy-back program, now totaling $300 million.

Segment Performance Highlights

The Network business unit delivered an 11% increase in underlying EBITDA to $495 million, buoyed by higher allowable regulated revenue following a final reset weighted average cost of capital (WACC) of 8.51%. Volumes on the network rose 3%, with improvements in operational reliability such as a reduction in rail cancellations. However, increased maintenance costs partially offset these gains.

Coal haulage volumes grew 6% to 99.2 million tonnes, contributing to a 3% revenue increase. Yet, EBITDA declined 7% to $264 million due to a lower yield from customer mix and a 10% rise in operating costs, including higher maintenance and train crew expenses. Contract utilisation improved to 84%, though still below historical norms.

The Bulk segment faced significant headwinds, with volumes down 19% to 27.5 million tonnes and EBITDA falling 25% to $84 million. Declines were driven by lower grain, bauxite, and iron ore railings, compounded by a derailment in Western Australia and increased doubtful debt provisions. New contract wins and acquisitions, such as the $26 million purchase of Flinders Logistics, aim to support future growth.

Capital Management and Outlook

Aurizon maintained disciplined capital allocation, with sustaining and transformation capital expenditure focused on network reliability and productivity improvements. Growth capital was reduced by 14% year-on-year to $44 million, reflecting a step-down in expansion projects. The company’s gearing ratio increased slightly to 54.2%, with proactive refinancing extending debt maturities and maintaining credit ratings at BBB+/Baa1.

Looking ahead, Aurizon reaffirmed its FY2025 guidance, expecting group underlying EBITDA between $1.66 billion and $1.74 billion, though likely at the lower end of the range. Sustaining capex is forecast at $640 million to $720 million, with growth capex between $125 million and $175 million. The company anticipates Network EBITDA growth offset by flat Coal EBITDA and a weaker Bulk segment performance.

Strategic Focus and Market Dynamics

CEO Andrew Harding emphasized Aurizon’s commitment to balancing resilient Network and Coal businesses with growth in Bulk and Containerised Freight. The company aims to reduce thermal coal revenue exposure to 10-20% by 2030 through diversification. Operational initiatives such as the Daily Rolling Plan have improved network reliability, while new land-bridging services via the Port of Darwin are gaining traction.

However, Aurizon faces ongoing challenges from inflationary cost pressures, competitive freight markets, and evolving customer demand. The company is conducting reviews to optimize costs and fleet utilization, alongside assessing its capital and network ownership structures, with updates expected later in 2025.