Aurizon flags impairments up to $160m

Aurizon (AZJ) has flagged further asset impairments for fiscal 2014, blaming subdued market conditions and cancelled capital projects in the resources sector.

Aurizon also announced a further 103 positions have been made redundant, largely at the head office, in addition to cuts announced in May.

The rail freight operator announced asset impairments and additional provisions for voluntary redundancy costs in the range of $130 million to $160m, before tax.

This follows Aurizon's December announcement of impairments, initially estimated at between $177m and $197m. However, Aurizon today said actual first-half impairments totalled $222m.

The group now expects total impairments for the full year between $352m and $382m, before tax.

The impairments reflect the company's best assessment of the current and short-term outlook for the domestic and global coal markets, as well as a further review of strategic assets, Aurizon said. 

Chief executive Lance Hockridge said the impairments are a response to an in-depth review of the market outlook.

"While that outlook for the resources sector is still very attractive, it is clearly more subdued," Mr Hockridge said.

Aurizon and China's Baosteel are bidding for Aquila Resources and have said they will not sweeten their joint $3.40 per share offer.