6 facts Aurizon shareholders need to know

We review the company's recent market update.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Last week the Queensland rail freight company formerly known as QR National, Aurizon (ASX: AZJ) held an Analyst and Investor presentation which covered a lot of ground and provided shareholders with plenty of information.

Aurizon operates in three main businesses namely coal, freight and network services with its largest exposure by far to the transportation of coal from mines to ports for export. Having only listed in 2010 when the Queensland government sold down its stake in the company, many investors are still to appreciate the unique monopolistic attributes of Aurizon and significant cost savings occurring from managements efficiency drive.

6 key points to come out of the presentation were:

  1. Management confirmed that total coal tonnes hauled in financial year (FY) 2013 was 193.7 million tonnes (Mt).
  2. Aurizon is targeting over $230 million in cost efficiencies and productivity improvements. A chart provided in the presentation showed that the aim was to meet this target by FY 2015.
  3. While the coal price has fallen, which in turn has affected many coal mining companies, Aurizon's volume-based business has remained resilient. In FY 2013 the firm secured coal haulage contracts for 120 Mt per annum. These contracts were signed with major coal producers including Rio Tinto (ASX: RIO) and Whitehaven Coal (ASX: WHC).
  4. Management has set the hurdle bar high. Its aim is for Aurizon to be world class. A slide contained in the presentation highlights businesses globally which have world's best practice and Aurizon is aiming to emulate these practices.
  5. While Aurizon's primary focus is on coal and iron ore freight, it sees significant potential to further develop its capabilities in secondary bulk areas such as food, energy, minerals, metals and industrial goods. This could provide significant long-term growth for shareholders.
  6. Saving the best till last – the most exciting topic discussed in the presentation was management's aim to drive the operating ratio to 75%. For shareholders, one of the highlights is that management is pushing for a lean business from the top, right down to the "little things". Of course all the little savings add up to big savings and provide the right mind-set for employees across the whole business.

Foolish takeaway

Aurizon's management appear deeply focussed on creating shareholder value. It's a pleasant surprise to see a presentation that focuses so intently on value creation — a focus, sadly, too few managers have. With its significant economic moat and shareholder-oriented management, Aurizon is definitely one for the watch list.

Need to get your portfolio on the right track? Our #1 dividend-paying stock could help. Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading


Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »