Company Reports

Aurizon's fiscal 2026 underlying EBITDA increased 9% to AUD 1.72 billion on higher regulated earnings and growth in the noncoal haulage business. Guidance midpoints imply 2% growth in EBITDA and DPS in 2027. Shares fell 10% on the day.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Aurizon reported volume growth across all segments in the 10 months to April 30, 2026, compared with the same period last year. Management also reaffirmed fiscal 2026 guidance for underlying EBITDA of AUD 1.680 billion-AUD 1.750 billion and full-year dividend guidance of AUD 22-23 cents per share.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Aurizon's first-half fiscal 2026 underlying NPAT increased 16% to AUD 237 million on 4% revenue growth, operating leverage, and non-repetition of one-off costs. Earnings guidance was maintained, but management lifted full-year dividend guidance by AUD 0.03 to AUD 0.22-AUD 0.23 per share.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Amid weak coal prices and weather impacts, we estimate coal export volumes over the trailing 12 months to November 2025 declined 3% year on year. Separately, Aurizon has agreed on terms with customers to increase rail network revenue under a new 10-year contract starting mid-2027.

Aurizon’s fiscal 2025 EBITDA decreased 3% to AUD 1.58 billion on weaker volumes and increased bad debt provisions tied mainly to three noncoal bulk customers. Underlying net profit dropped by 14% to AUD 348 million.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Aurizon guides to fiscal 2025 EBITDA of AUD 1.575 billion, 5% below the bottom of the prior guidance range. The cause was lower volumes on the Queensland rail network, which has been hampered by wet weather, and an increase in bad debts following bankruptcy of noncoal bulk customers.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Aurizon is at risk of missing the bottom end of the fiscal 2025 EBITDA guidance range of AUD 1.66 billion-AUD 1.74 billion. Key headwinds include tough operating conditions for some commodity producers and heavy rainfall in Central Queensland, which has disrupted coal production.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

Aurizon's first-half fiscal 2025 underlying EBITDA fell 4% to AUD 814 million and underlying NPAT fell 14% to AUD 205 million on weaker grain volumes, cost inflation, and bad debt provisions. Management kept full-year guidance but suggested the firm is tracking toward the bottom of the range.

No-moat Aurizon is cheap, trading at a 24% discount to our unchanged fair value estimate. Valuation metrics are attractive and we forecast solid medium-term growth as recovering coal haulage revenue is leveraged over a mostly fixed-cost base. We also think the long-term outlook for Australia’s coal exports is far better than most realize. Aurizon’s rail operations and infrastructure are defensive and its financial position is sound. Considering these positives, its forward P/E ratio of 14 and mostly franked dividend yield of 5.5% are attractive. Aurizon’s rail and logistics peers are more richly priced and trade on P/E ratios of over 20. For more details, see our Aurizon Stock Pitch published on Nov. 29.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

We downgrade Aurizon Holdings’ moat rating to no-moat from narrow following a periodic review by Morningstar’s moat committee. While we maintain Aurizon’s underlying asset quality is good, forecast excess returns are slim, and investments in new businesses to diversify away from coal weigh on future returns. We think there is significant uncertainty about whether the company can generate returns on invested capital above our estimate of the company’s cost of capital a decade from now, hence the no-moat rating. We estimate the firm’s return on invested capital was 6.1% in fiscal 2024 and think it will remain below the firm’s 7.3% weighted average cost of capital for at least the medium term.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.