Aurizon launches cost-cutting drive

Country's largest rail group targeting $230m 'cost improvement' within two years.

The country's largest rail group, Aurizon, formerly QR National, will embark on a cost cutting drive to slash $230 million in expenses in the next two years that will likely include job cuts and asset sales.

In an investor presentation, Aurizon said it was targeting a $100 million reduction in support costs and at least $130 million in "productivity improvement" - including cuts of up to $70 million in labour - by the close of the 2014-15 financial year.

"Aggregate target cost improvement in FY14 and FY15 is expected to exceed $230 million, which is over and above revenue quality improvements, growth and other initiatives," Aurizon said.

Its targeted savings in labour for its above the line rail operations included a "flexible workforce", "outsourcing or ceasing of non-core activities" and "rationalisation of yard, terminal and maintenance footprint". 

Aurizon said coal hauled in FY13 would come in at 193.7mt, within its guidance range of 192mt to 195mt.