AURIZON Holdings Limited (ASX:AZJ) has delivered a sharp lift in full year statutory profit to $604 million, amid a flat forecast for rail haulage in FY16.
Net profit after tax increased 139 per cent compared to the previous year, impacted by asset impairments of $317 million and voluntary redundancy costs of $69 million.
Underlying earnings before interest and tax increased 14 per cent from FY14 to $970 million, while revenue remained steady at $3.8 billion.
Aurizon CEO and managing director Lance Hockridge has highlighted how the company achieved its core financial target of 75 per cent operating ratio.
He says a series of cost reduction and productivity initiatives offset far lower rail volumes and revenue than initially forecast.
"Over the past two years we've delivered cumulative transformation benefits valued at more than a quarter of a billion dollars, as committed to the market," Hockridge says.
"We've hauled 6 per cent more in above rail tonnages with 13 per cent less people and 17 per cent less locomotives, and delivered major growth projects on time and on budget.
"The catalyst for the next phase of transformation in the company is new enterprise agreements covering employees in Queensland, which will provide us with productivity enhancements, operational flexibility and cost reductions.
"We're also continuing to assess and progress opportunities as we look to diversify and profitably grow the business.
"We understand the current market challenges but likewise we're committed to a strategy of transformation and long-term growth."
The network business delivered record tonnages of 226 million tonnes in FY15, with EBIT up 17 per cent to $484 million.
Aurizon has warned rail haulage will remain flat in FY16, with an outlook of up to 220mt of coal, 24mt of iron ore and 45mt of freight.
"We are committed to these challenging financial targets despite the subdued market and tonnage outlook," Hockridge says.
"Productivity improvements and cost reductions will underpin continuous improvement in our operation and for our customers, and also margin growth for the company.
"The external environment will continue to provide challenges however we have a clear reform path ahead to achieve Aurizon's full potential as a world leading rail-based transport business."
Revenue in FY16 will be impacted by $200 million, following a reduction in freight revenue for the Transport Services Contract with the Queensland Government and expiration of the passenger fleet maintenance contract.
A final dividend of 13.9c per share will be paid on September 28, a 64 per cent improvement in comparison to the previous year.
Get our daily business news
Sign up to our free email news updates.