AUSTRALIAN freight operator Aurizon reports substantial interest from potential purchasers of East Coast Rail (ECR), the former One Rail Australia (ORA) coal haulage business that operates in New South Wales and Queensland.
Aurizon undertook to divest ECR in order to secure regulatory approval for the acquisition of ORA from Macquarie Asset Management and Dutch pension fund PGGM, which it completed in July.
“In parallel with demerger preparations, we have been pleased with the level of engagement from trade sale buyers and are expecting non-binding offers in September,” says Aurizon chief financial officer, Mr George Lippiatt.
Aurizon is expecting to select the eventual purchaser of ECR in the fourth quarter of 2022.
Analysts have put a value of $A 1bn ($US 710m) on ECR, and Aurizon reports that higher prices for coal are boosting the market for the sale of this business.
This is despite Aurizon reporting a 15% fall in profit in the financial year to June 30 2022. Net profit in 2021-22 was $A 513m, down from $A 607m in 2020-21, and the company cut the final dividend to $A 0.109 per share.
In 2020-21 Aurizon hauled around half of Australia’s export coal volume, carrying a total of 202 million tonnes.
Coal tonnage was down by 4% in 2021-22, but Ebitda at Aurizon’s coal business was up 1% on the year before at $A 541m, reflecting the benefits of cost management, an increase in Australia’s consumer price index (CPI) that favourably impacted contract rates, and higher revenue yield.
“We were pleased to complete the acquisition of One Rail Australia in July 2022, which will result in an immediate uplift in earnings as well as providing new opportunities as we expand into commodity-rich regions in South Australia and the Northern Territory,” says Aurizon managing director and CEO, Mr Andrew Harding.
“This includes large resources of future-facing commodities that will feed and fuel the world in decades to come, such as grain, copper and rare earths.”