Ports and rail operator Asciano is sticking to its five-year earnings targets after posting a 74 per cent increase in first half profit in the face of industrywide downgrades.
Shares in the company gained two per cent on Tuesday as Asciano reiterated its outlook and declared a boost to the company’s dividend following a strong result from its Pacific National coal haulage business.
The company forecast more earnings growth in the second half of the financial year after making a net profit of $199.9 million in the six months to December 31, up from $114.8 million in the previous corresponding period.
Chief executive John Mullen said Asciano was committed to its plan, announced 18 months ago, which included an average increase in earnings of 15 per cent per year.
“We still think we’re tracking in that line,” Mr Mullen told analysts on Tuesday.
“We’re in an environment where all of our customers, the resources industry, etc, are all reporting materially downgraded results.
“We have not done that. We are managing to stick to the line of forecasts that we gave.”
Asciano said revenue in the six months to December of $1.87 billion was up 10 per cent from $1.7 billion in the same period in the previous year.
Profit growth was driven by significant growth in volumes in Asciano’s Pacific National coal haulage business due to new contracts.
Its ports business also experienced higher volumes, as activity from the resources sector rose and a record number of cars were imported.
The company expects its PN Coal and Bulk & Automotive Port Services businesses to continue their strong performances, driven by new contracts, stronger regional port activity and the contribution from cargo handling unit C3 Ltd.
While current market conditions made forecasting volume growth for its Terminals & Logistics division difficult, Asciano did not expect the current flat market growth to deteriorate further.
Mr Mullen conceded there would be ups and downs over the five year period, but he was pleased the company had managed to deliver on target even though two of its major divisions contributed very little in earnings growth.
Asciano expects earnings and revenue in the second half of the 2012/13 financial year to be higher than in the same period in the previous year as it continues to make $150 million in savings.
Shares in the company closed 10 cents, or 1.9 per cent higher at $5.35.
Morningstar analyst Ross MacMillan said the market was assuming that Asciano would achieve its goals.
“I sensed that they’re confident but it’s demanding, what they’re looking to achieve in terms of profitability,” Mr MacMillan said.
“Pacific National Coal and the auto business are really kicking goals.”
An analyst, who did not wish to be named, said the result was ahead of expectations, driven largely by the PN Coal result.
But he said the company’s outlook was slightly ahead of the market.
“We need to see further results to get confidence in achieving those numbers.”
