This morning $6 billion rail and port operator Asciano Ltd (ASX: AIO) reported a 1.2% rise in statutory profit for the six months to 31 December 2014, coupled with a 3% fall in revenue.
However, despite a big increase in its interim dividend to 8.75 cents per share from 5.75 cents per share last year, the market was unenthusiastic with today's report, sending its share price down 2% at midday.
The company has been focused on cutting costs and spending as the resources sector slows down from an unprecedented decade-long mining boom. Despite plunging coal prices putting pressure on producers; Asciano's hauled coal volumes increased 5.8% year on year.
Capital expenditures dropped 15.3% to $264.3 million, whilst operational cash flow jumped 27.7% higher. Asciano's 'Business Improvement Program' reportedly delivered $56.9 million in benefits, enabling its earnings before interest, taxes, depreciation and amortisation (EBITDA) margin to increase 2%, from 28.4% to 30.4%.
In a separate announcement the company also said that Chairman Malcolm Broomhead would retire from the board later in the year, at the next annual general meeting (AGM).
Is it time to buy Asciano?
Despite a somewhat lacklustre year, Asciano painted a slightly rosier outlook for the coming year, stating: "Assuming no material change in the current business environment, Asciano continues to expect FY15 underlying EBIT growth to be at a higher rate than the underlying EBIT growth of 5% achieved in FY14, driven by modestly improving volume growth across some activities versus the pcp and an ongoing focus on business improvement initiatives, in particular the efficiencies flowing from the integration of the Pacific National rail haulage activities."
Unfortunately with spending and productivity in the resources sector expected to experience further declines, a fully valued share price and a dividend yield of just 2.6%, personally, I wouldn't buy Asciano shares today. Like its peer Aurizon Holdings Ltd (ASX: AZJ), it's probably best left on the watchlist for now.
