Rail boss focusing on existing works, not 'fanciful' ideas
The railroad sector has seen a "lifetime's supply" of national building proposals he told a business lunch on Tuesday, pointing to the Alice Springs to Darwin project and the Melbourne to Brisbane inland railway.
"They seem to be getting more fanciful," he told a business luncheon. "It's nice to be visionary but Australia needs to get real ... we would be much better advised to focus on sustainable growth using existing infrastructure as a springboard.
"We should focus on leveraging as much as possible our existing networks because optimisation of brownfield is the right answer."
Aurizon, the former Queensland Rail, was privatised and floated onto the sharemarket in 2010. Since then, it has undertaken a heavy reorganisation, which has resulted in the workforce being cut by 15 per cent.
Mr Hockridge said the mounting pressures on the resources sector mean the focus must increasingly be on boosting operating efficiencies of existing assets. "The resources boom clearly has moved from high commodity prices into the next chapter of cost containment, capital efficiency and restructuring," he said. "Break-neck expansion has given way to a more sober environment."
As part of this, the group has boosted the payload of its coal trains in the Hunter by more than 10 per cent and by more than 26 per cent on the Newlands system in Queensland, by "using the same crew numbers and without buying new capital gear".
"This is about squeezing more out of what we've already got and being truly efficient," he said.
As part of this, Aurizon is now working to double train lengths of up to four kilometres carrying more than 20,000 tonnes of coal, he said.
Aurizon has a target of achieving a gross profit margin of 25 per cent by 2015, up from around 10 per cent when it floated.
Frequently Asked Questions about this Article…
Aurizon's CEO Lance Hockridge criticised recent high-speed rail proposals as too fanciful, urging Australia to be realistic and focus on sustainable growth using existing rail networks as a "springboard" rather than pursuing visionary new builds.
Aurizon is prioritising optimisation of its existing networks—what the company calls brownfield improvement—arguing that leveraging current assets is the right answer for sustainable growth and efficiency rather than large-scale new projects.
Since privatisation and listing in 2010 (from the former Queensland Rail), Aurizon has undertaken heavy reorganisation that reduced its workforce by about 15%.
Aurizon boosted coal train payloads by more than 10% in the Hunter and over 26% on the Newlands system in Queensland, achieving these gains with the same crew numbers and without buying new capital equipment.
Yes — Aurizon is working to double train lengths to up to four kilometres, with trains designed to carry more than 20,000 tonnes of coal, which is part of squeezing more output from existing assets to improve efficiency.
Aurizon has a target of achieving a gross profit margin of 25% by 2015, up from around 10% when it first floated on the sharemarket.
According to Mr Hockridge, the resources boom has shifted from high commodity prices to a focus on cost containment, capital efficiency and restructuring, prompting Aurizon to prioritise operating efficiencies over break‑neck expansion.
Investors should note Aurizon's focus on brownfield optimisation, workforce reorganisation, payload and train‑length improvements, and its profit margin target — all indicators the company is concentrating on boosting operating efficiency and capital discipline.
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