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Why the Aurizon share price is one to watch today

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The Aurizon Holdings Ltd (ASX: AZJ) share price is worth watching today after the S&P/ASX 200 Index (INDEXASX: XJO) group’s half-year results.

What did Aurizon report today?

Aurizon posted group earnings before interest and tax (EBIT) up 12% on the prior corresponding period (pcp) to $456 million. Statutory net profit after tax (NPAT) climbed 51% higher to $343 million while free cash flow jumped 26% on pcp to $465 million.

The Aurizon share price is on watch as the group has increased its buyback program by $100 million to $400 million. The group’s dividend increased by 20% on pcp to 13.7 cents per share.

Aurizon had a big 6 months and secured key contract extensions which helped de-risk and extend its contract book. The ASX 50 rail freight group also had a focus on operational efficiencies during the first half of FY 2020.

The group reported first-half volumes were impacted by weaker coal prices and customer maintenance activities. Aurizon reported total revenue up 5% on pcp to $1,529 million during the half.

I’d also be keeping an eye on the Aurizon share price after the company reported a 19% surge in underlying earnings per share to 13.6 cents.

The group’s Coal segment went largely sideways during the year with EBIT edging 2% lower to $206 million. Aurizon’s Bulk segment increased revenue by 15% to $297 million and EBIT by 208% to $44 million.

It was a similar story for its Network business with revenue climbing 7% to $596 million and EBIT jumping 14% to $232 million.

How will the Aurizon share price react today?

It’s worth keeping an eye on the Aurizon share price today following the half-year report. While the headline numbers have broadly trended upwards, investors could trade heavily in the $10 billion rail freight group when the market opens.

Aurizon did reaffirm its FY2020 EBIT guidance of $880 million to $930 million today while lowering capital expenditure (capex) guidance. The group expects capex to be $500 million to $530 million this financial year due to the timing of growth projects.

A legal and capital restructure review is underway at Aurizon while funding remains largely stable.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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