Asciano's profit rockets 39%

Australia's largest national rail freight and port operator should be on every investor's watch list.

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

There was plenty to like about Asciano's (ASX: AIO) full year financial results released to the market this week. As Australia's largest national rail freight and port operator, Asciano is heavily exposed to the underlying economic activity of the nation. Given the headwinds the domestic economy has faced in financial year (FY) 2013 this makes the double-digit growth rates achieved all the more impressive.

A 10.6% boost in underlying revenue to $3.7 billion and a 39.2% increase in underlying net profit after tax to $348.1 million was primarily thanks to solid performances from two divisions.

The Pacific National Coal haulage division saw coal volumes increase 15.5% and revenues increase 18.9% to $842 million (net of access fees). This revenue growth combined with a significant reduction in capital expenditure helped push operating earnings before interest and tax (EBIT) up 19.3% to $287.9 million.

The Bulk and Automotive Port Services division also contributed to overall group growth. Vehicle movements and vehicle storage were both up strongly, which helped boost underlying revenue by 38.1% to $680 million and underlying EBIT by 34.6% to $89 million.

The board has declared a final dividend of 6.25 cents per share (cps), which when added to the interim dividend of 5.25 cps provided shareholders with a full year dividend of 11.5 cps – up 53% year on year and places the stock on a dividend yield at 2%.

Foolish takeaway

Management's guidance is for the contribution from new contracts and current customer commitments to help Asciano post higher earnings in financial year 2014, although the growth rate is not expected to be as strong as 2013.

Given full year 2013 earnings per share were 34.8 cps, at Asciano's current share price of $5.56 the company is trading on a historic price-to-earnings ratio of 16 times. As highlighted here, in reference to Asciano's major competitor Aurizon (ASX: AZJ), given the monopoly-type earnings Asciano enjoys on parts of its asset base, this valuation does not appear demanding.

Asciano's 2% yield a little skinny for you? Interested in our #1 dividend-paying stock? 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 »