Aurizon share price slips as dividend cut by 24%

Aurizon reported mixed results today.

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Key points

  • Aurizon share price slips on the back of FY22 earnings results
  • The company has cut its dividend by 24% 
  • However, the company highlighted overall it has returned $4.8 billion to shareholders in the past seven years

The Aurizon Holdings Ltd (ASX: AZJ) share price is falling today on the back of the company's FY22 results.

Aurizon shares are currently trading at $3.80, a 6.06% fall. In comparison, the S&P/ASX 200 Index (ASX: XJO) is falling 0.28% today.

Let's take a look at what the freight operator reported today.

What did the company report?

Highlights of the results include:

What else happened in FY22?

Aurizon's coal business delivered an EBITDA of $541 million, up 1% on the pcp. This was despite coal tonnages dropping 4% compared to 2021. A better yield on contracted tonnes and lower track access, train crew and maintenance costs contributed to this result.

The company's network business EBITDA fell 6% on the pcp. Despite higher coal demand, volumes on the Central Queensland Coal Network slipped 1% to 206.5 million tonnes. Wet weather and COVID-19 contributed to this result.

Aurizon's bulk business revenue dropped 7% to $130 million. Volumes were lower due to the impact of floods, COVID, and reduced production from some customers.

The company finalised the acquisition of One Rail Australia in July 2022. Aurizon predicts this will increase revenue and tonnages for the bulk business in the future.

Commenting on the outlook for One Rail, Aurizon CEO Andrew Harding said:

One Rail is a high performance business with a highly-capable workforce. The acquisition provides the
platform for the next phase of growth for Aurizon, as we aim to double earnings in our bulk business by 2030.

What did management say?

Further sharing his insight on the results, Harding added:

The company has delivered a solid operational and financial result despite a challenging year with the ongoing COVID-19 pandemic, major flooding events and customer-specific reductions in production impacting our volumes.

Group earnings have remained stable through continued strong operational performance and a number of revenue protection mechanisms that are in place. This underlines the strength and resilience of the Aurizon business, and a commitment to deliver shareholder returns.

The total dividend for FY2022 represents a yield of over 5%. Including this final dividend, Aurizon has returned to shareholders $4.8 billion over the past seven years through dividends and share buybacks.

What's next?

Aurizon is forecasting an EBITDA of between $1.47 and $1.55 billion in the 2023 financial year. This includes 11 months of impact from the One Rail bulk business.

The company said sustaining capital expenditure is between $500 and $550 million.

Aurizon share price snapshot

The Aurizon share price has jumped nearly 9% in the year to date, but it has slipped 6.5% in the past year.

Aurizon has a market capitalisation of more than $7 billion based on today's share price.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings Limited. 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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