Lower coal shipments and higher debts to hit Aurizon profit

Freight giant Aurizon expects to take a hit to its profit this year as it moves fewer shipments of coal in Queensland and chases significant debts from customers.

Aurizon says profit impacted by lower coal volumes.

Freight giant Aurizon expects to take a profit hit this year as it moves fewer than forecast shipments of coal by rail in Queensland, amid warnings about mine closures under the weight of the state’s unpopular royalty regime.

Brisbane-based Aurizon on Thursday said that earnings for the 2025 financial year would be $1.585bn, missing analyst consensus.

Aurizon blamed the downbeat outlook on lower network volumes in its central Queensland coal rail network, and was forced to lift an accounting provision for the impairment of $50m owed by some of its customers.

Aurizon said it was continuing to pursue “all commercial and legal avenues” to recover debts from customers and will provide a further update at its August results.

Bowen Coking Coal boss Nick Jorss this week said crippling royalties and depressed coal prices threatened 500 jobs at its flagship Burton mine and the state faced coal mine closures if the royalty regime was not wound back.

Bowen Coking Coal shares have been suspended pending an update on funding.

Aurizon last month said volumes on its central Queensland coal network in the ten months to the end of April were 169.1 million tonnes, 4 million tonnes lower compared to the prior corresponding period. The reduced shipments were mainly due to wet weather impacting production and port terminal operations.

Andrew Harding, Managing Director and CEO Aurizon

Exacerbating the situation, Aurizon said “take or pay” arrangements would not come into force across most of the rail network and would result in the deferral of $50m of 2025 earnings. Aurizon expects these earnings will be recovered by the 2027 financial year.

Aurizon uses “take or pay” contracts, primarily in its coal haulage business, to ensure stable cash flow and revenue. The contracts guarantee a minimum level of revenue for Aurizon, even if actual volumes hauled are lower than forecast.

The $1.58bn forecast profit figure is 2 per cent lower than market consensus of $1.61bn, according to Citi. Its shares closed 1c lower to $2.99.

Aurizon has flagged a review of the current ownership structure for the network that manages 2670km of rail lines servicing Queensland’s coking coal basin. Aurizon, which runs a haulage business that transports coal and other commodities, as well as a separate division that operates rail networks, has previously considered a formal separation of the two businesses. Chief executive Andrew Harding has previously declined to detail what options were being considered as part of the review, but has said the company’s rail networks business had received significant interest from external investors over the years.

“The truth is, we have had many banking groups come through with pitches over the years … I’ve seen that probably for the last six or seven years,” he said.

Aurizon’s bulk and containerised freight business, which transports commodities including iron ore and grain across the country, weighed on the company’s half-year results released in February. Interim profit across the group was 4 per cent lower at $814m, driven by a 25 per cent fall in earnings in the company’s bulk division to $84m.

Earnings across the company’s coal business were broadly in line with expectations. Separately, Aurizon’s group executive bulk, Anna Dartnell, will leave the business after serving in the role since May 2023. Aurizon’s current chief financial officer, George Lippiatt, has been appointed into a new role of group executive bulk and containerised freight. Gareth Long, who handled containerised freight, is now acting CFO and group executive strategy.