Private rail operator QR National, previously owned by the state government, has downgraded its forecasts for full year earnings, one day before the Queensland election.
QR’s shares fell sharply after it cut its guidance, blaming industrial action, weaker demand for coal transport and wet weather.
The industrial action does not involve its own workforce, but relates to ongoing strikes at BHP Mitsubishi Alliance mines in Queensland, affecting rail haulage rates.
QR had previously forecast earnings before interest and tax (EBIT) to be $578 million in the 12 months to June 30, 2012.
On Friday, it lowered that to a range of $540 million to $580 million.
The company’s shares closed down 12 cents, or 3.08 per cent, at $3.77, after having earlier traded even lower.
QR National was part of a contentious $14 billion privatisation program following the financial crisis, in which retail investors were offered incentives to join last year’s float.
Despite Friday’s falls, QRN National shares are still 28 per cent higher than a low of $2.94 last October.
Industrial action in the Bowen Basin has caused significant falls in the amount of tonnes of coal hauled by QR and could cause more losses in the future, QR said.
Recent rain had caused the closure of the Goonyella and Blackwater coal systems, as well as various sections of the line between Rockhampton and Cairns, the company said.
CMC Markets chief market strategist Michael McCarthy said the downgrade increased the significance of the company’s stated interests in getting more involved in hauling iron ore in Western Australia.
“That is probably a response to internal concerns about growth prospects,” he told AAP.
“As the disasters in Queensland have showed, if you’re in a single market and that single market gets hit, there’s not a great deal you can do.”
However he said the medium to long term outlook for Queensland coal was terrific and QR National was well-placed to be involved in that, whether it was haulage on lines from the Galilee, Bowen or Surat basins.
Commbank equities analyst Matt Crowe disagreed, saying he did not think QR’s exposure to coal was a concern.
“If they can make money in Western Australia then do it, but I think diversification for its own sake is something the market can find quite annoying,” he told AAP.
“Do what you’re good at and QR’s good at hauling coal.”
He said QR could not be blamed for striking workers at the Alliance mine or bad weather and the market was sympathetic about that.
The situation is considered ironic, with many analysts predicting there would be industrial problems with QR’s highly unionised workforce when it was privatised, which have not occurred.
“What people like about QRN is the opportunity to improve the cost base, (and) that’s still there,” Mr Crowe said.
QRN has monopoly over Queensland’s coal network tracks, owning 2,300km of track and lists a fleet of 700 locomotives and 16,000 wagons.
Its only serious competitor is Asciano’s Pacific National.
Coal used both in steel and for energy is Australia’s second-biggest export earner – worth about $43 billion in 2010 – and remains the world’s largest and fastest-growing energy source.
