Asciano hauls in 74% first-half rise
ASCIANO has overcome weakness in two of its four divisions to post a 74 per cent rise in first-half profit and expects to boost earnings in the second half amid tentative signs of an upturn in the economy.
Asciano's shares rose as much as 6 per cent to almost a three-year high on Tuesday after the ports and rail company beat analyst expectations by posting a $199 million profit for the first half, up from $114 million previously. Revenue rose 8 per cent to $1.8 billion.
Asciano declared an interim dividend of 5.25¢ a share, up from 3.5¢ previously.
Chief executive John Mullen said the company had boosted earnings despite "very subdued market conditions" for its Pacific National Rail division, and its ports and logistics divisions. The company bore the brunt of a sharp fall in economic activity from June to September.
"In this first half, even though two of our major divisions contributed very little in [pre-tax earnings] growth, the company overall still managed to deliver on target," he said. The terminals and logistics division was "especially impacted by the sharp drop-off in the domestic economy" in the first half, particularly in Victoria.
While its fastest-growing division, Pacific National Coal, faced a decline in export demand for metallurgical coal in Queensland during the first three months of the half, contract wins helped the unit boost pre-tax earnings by 50 per cent to $150 million over the six months.
The division's earnings included $21.5 million from the sale of land at Kooragang Island in Newcastle.
Mr Mullen did highlight that the rail-haulage division failed to win a big contract from Whitehaven Coal in New South Wales. The contract went to Aurizon, which was "prepared to offer terms and conditions that PN Coal was not able to match".
The company has begun a review of the coal-haulage division's business strategy to ensure it can cope with the triple whammy of lower coal prices, the high Australian dollar and increased costs in the medium term.
Asciano expects earnings and revenue in the second half to be higher than in the same period in 2011-12. However, it cautioned that that depended on the domestic and global economies not deteriorating.
"We share the hope of everybody that we may see some . . . general economy rebound. [But] in this last half we didn't see it," Mr Mullen said.
So far in the second half, volume growth for Asciano's ports and logistics division had been soft but Mr Mullen said he did not expect conditions to weaken further.
The division is focused on redeveloping its terminal at Port Botany in Sydney, including the redevelopment of the so-called "Knuckle". Construction of the latter is due to begin next month.