Ports and rail operator Asciano Ltd has returned to a full year profit, boosted by more coal contracts in Queensland and fewer one-off charges.
Asciano said it was optimistic about the medium term, despite being affected by floods in Queensland, congestion in the NSW Hunter Valley rail network, industrial action in its ports division and the downturn in Australia’s economy.
Asciano on Wednesday booked a net profit of $145.2 million for the 12 months to June 30, compared to a loss of $975.9 million a year earlier.
The prior year’s result included $1.14 billion in impairment charges, compared to $69.2 million in negative material items in 2011.
Asciano’s earnings before material items rose 21.7 per cent to $539.1 million in 2011.
Chief executive John Mullen said the group’s three divisions – Pacific National Coal, Pacific National Rail and Patrick (ports) – had performed very well in 2011 despite difficult economic conditions and exceptional events such as the Queensland floods.
“Despite a number of these factors continuing to persist in fiscal 2012, we expect performance to continue to improve, underwritten by new contracts and ongoing focus on business improvement,” Mr Mullen said in a market briefing.
“While we’re confident of continued strong EBIT (earnings before interest and tax) growth, external economic uncertainty makes specific forecasting difficult, so the company will update investors further regarding the outlook for fiscal year 2012 at the company’s AGM (annual general meeting).”
Mr Mullen said each of Asciano’s divisions had identified new growth opportunities.
Furthermore, Asciano had decided that after evaluating the group’s structural options, it would not demerge its ports and rail operations.
“The board and senior management believe that the company’s current organic growth strategy, including an integrated business approach, is the most effective way to deliver significantly improved shareholder returns at this time,” Mr Mullen said.
Asciano shares were 5.5 cents lower at $1.515 on Wednesday.
City Index chief market analyst Peter Esho said the Asciano result was largely within market expectations but was little to get excited about.
Earnings of $539 million were in line with prior guidance of $530 million to $540 million, but Asciano’s outlook was disappointing.
Asciano said revenue and earnings had lifted in 2011 despite a difficult trading environment.
The revenue increase was driven primarily by new coal contracts in Queensland, the renegotiation of existing coal contracts, and improved tonnages in bulk rail operations.
Patrick’s revenue was flat.
Revenue for the Patrick ports business, which operates container terminals, suffered from a loss of contracts, changes to shipping consortia, and a disruption to the flow of cars after the earthquake in Japan.
