Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — QR National — H1 FY2012 Earnings Presentation
37 slides from Aurizon's earnings presentation, Feb 16, 2012
Slide 1: Interim Results 2012
INTERIM RESULTS 2012 Lance Hockridge – MD & CEO Deborah O’Toole – EVP & CFO 16 February 2012
Slide 2: Important Notice
IMPORTANT NOTICE Reliance on third party information This Presentation was prepared by QR National Limited (ACN 146 335 622) (“QR National”). This Presentation may contain information that has been derived from publicly available sources that have not been independently verified. No representation o
Slide 3: Agenda
AGENDA Company update Lance Hockridge, Managing Director and CEO Financial Overview Deborah O’Toole, Executive Vice President and CFO Medium to Long Term Outlook Lance Hockridge, Managing Director and CEO Questions and Answers 3
Slide 4: FY12 Half Year Performance
FY12 HALF YEAR PERFORMANCE LANCE HOCKRIDGE – MD & CEO
Slide 5: HY12 Continues Delivery and Momentum
HY12 CONTINUES DELIVERY AND MOMENTUM Revenue of $1.8bn – up 1% on HY11 QUALITY RESULT Underlying EBIT of $251m – up 11% on HY11 IN A CHALLENGING Coal volumes of 97.5mt – down 2% on HY11 ENVIRONMENT Statutory NPAT of $189m versus $278m in HY11 due to $281m tax benefit Interim dividend of 3.
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS HY12 HY11 Variance $m $m % Revenue 1,767 1,748 1% Underlying EBITDA 468 446 5% Statutory EBIT 260 131 98% Underlying EBIT 251 226 11% Statutory NPAT (1) 189 278 (32%) Underlying NPAT 168 71 >100% Statutory EPS (cps) 7.8 12.4 (37%) (1) HY11 included $281m tax benefit 6
Slide 7: Performance Metrics Robust on Reduced Volumes
PERFORMANCE METRICS ROBUST ON REDUCED VOLUMES QR National Group Operating metrics HY12 HY11 Coal Tonnages Comparison H1 H2 Revenue / NTK (A$/000 NTK) 55.4 53.5 FY11 Labour Costs / Revenue 31.7% 32.3% HY12 NTK/employee (MNTK) 7.0 6.9 Indicative tonnages Opex(1)/ NTK (A$/000 NTK) 47.5 46.6 EBITDA Marg
Slide 8: HY12 Delivering Against Strategy
HY12 DELIVERING AGAINST STRATEGY Strategy Execution Transformation Transformation Safety Safety performance continues to improve with LTIFR down 44% Commercial outcomes 35% of coal volumes on performance based contracts at 31st Dec 2011 Customer service Coal Revenue/NTK +9% on HY11 Per
Slide 9: Safety – Lead Indicator for Performance
SAFETY – LEAD INDICATOR FOR PERFORMANCE Lost Time Injury Frequency Rate (LTIFR) Medically Treated Injury Frequency Rate (MTIFR) 20 50 45 MTI’s/Million Hours Worked 17.5 LTI’s/Million Hours Worked 40 15 35 12.5 30 10 25 7.5 20 15 41% 5 10 2.5 44% 5 0 0 Sep-08 Dec-08 Sep-09 Dec-09 Sep-10 Dec-10 Sep-11
Slide 10: Focus on Productivity and Service Improvement
FOCUS ON PRODUCTIVITY AND SERVICE IMPROVEMENT 10.2 hrs 10.1 CQCN Payloads (Tonnes ‘000s) Average Total Turnaround Time (Hours) 40 10.0 38 9.9 36 9.8 Goonyella Blackwater 34 Blackwater/Moura 9.7 32 9.6 30 8.1 28 8.0 26 7.9 7.8 24 7.7 22 7.6 20 Goonyella 7.5 18 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-1
Slide 11: New Functional Structure Underpins Company-wide Focus on Customer Service
NEW FUNCTIONAL STRUCTURE UNDERPINS COMPANY-WIDE FOCUS ON CUSTOMER SERVICE Functional organisational structure aligns with global best practice Implementation commenced 1st December 2011 The new structure will be a critical enabler in delivering customer service excellence Aligns operational
Slide 12: Network Investment for Growth
NETWORK INVESTMENT FOR GROWTH 12
Slide 13: Northern Link Opens Up Major Growth Corridor
NORTHERN LINK OPENS UP MAJOR GROWTH CORRIDOR Northern Link (69kms of new rail) completed ahead of time The GAP Project will deliver: – a major upgrade and expansion of existing Newlands Coal System – supports the 33mtpa increase in capacity on the Newlands system bringing total system capacity t
Slide 14: Wiggins Island Rail Project Agreement Signed
WIGGINS ISLAND RAIL PROJECT AGREEMENT SIGNED A significant rail infrastructure investment servicing a new export terminal at Gladstone Early works in advance of construction commenced February 2012, with first railings scheduled mid-2014 Additional 27mtpa of capacity created, representing a 30
Slide 15: Diversification Through Iron Ore
DIVERSIFICATION THROUGH IRON ORE Iron Ore Growth Profile Tracking to our target of ~30mtpa by 2014 Iron Ore customers include: mt 30 – Karara Mining Ltd: up to 10.8mtpa(1) for ten years – commenced 15 Jan 2012 25 – Cliffs: volume increase from 8.5mtpa to 11mtpa – commencing March 2012 20 – Mt Gi
Slide 16: FY12 Financial Performance
FY12 FINANCIAL PERFORMANCE DEBORAH O’TOOLE - EVP & CFO
Slide 17: Financial Performance Summary
FINANCIAL PERFORMANCE SUMMARY HY12 underlying EBIT of $251m up 11% on HY11 Network Services underlying EBIT of $156m down 8% due to lower network volumes EBIT IMPROVEMENT Coal underlying EBIT of $139m up 38% on HY11 despite lower volume ON HY11 Freight underlying EBIT of $29m up 97% on HY11
Slide 18: Quality Result in a Challenging Environment
QUALITY RESULT IN A CHALLENGING ENVIRONMENT Financial Key Metrics Revenue ($m) 1,767 +1% Volumes 130.4 (1%) Underlying EBITDA ($m) 468 +5% Revenue / NTK (A$/000 NTK) 55.4 +4% Underlying EBIT ($m) 251 +11% Labour Costs / Revenue 31.7% +0.6% Statutory EBIT ($m) 260 +98% NTK/employee(2) (MNTK) 7.0 +1%
Slide 19: HY12 EBIT Movement
IMPROVEMENT vs. HY11 300 HY12 EBIT Movement 12 20 6 250 8 18 11 200 45 47 150 251 226 100 50 0 Improved fleet Transformation efficiencies Other Volumes Underlying HY11 revenue quality Freight volumes Underlying HY12 Qld Coal NSW Coal management Corporate growth Qld Coal costs The impact of lower Q
Slide 20: Major Committed Capital Projects
MAJOR COMMITTED CAPITAL PROJECTS Budgeted capital of $1.1bn GAP Final commissioning of project on track for June 2012 First railings commenced 19 December 2011 Budgeted capital ~$900m WIRP stage 1 Early works in advance of construction commenced February 2012 First railings scheduled for
Slide 21: Investment of Operating Cash Flows Funding Future Growth
INVESTMENT OF OPERATING CASH FLOWS FUNDING FUTURE GROWTH HY12 HY12 Underlying cash flow statement Balance sheet $m $m Operating activities Working capital (27) EBITDA 468 Property, plant and equipment 8,667 Other changes in working capital 22 Net debt (919) Net Interest paid (33) Other (626) Other n
Slide 22: Business Overview
BUSINESS OVERVIEW
Slide 23: Network Services
NETWORK SERVICES HY12 HY11 Operating metric HY12 HY11 Tonnages (million) 86.8 93.4 Access Revenue / NTK (A$/000 NTK) 17.1 16.0 NTK (billion) 21.3 22.7 Maintenance $ /’000 NTK(1) 2.6 2.5 Revenue ($m) 595.4 642.4 NTK / Track km (000’s) 9,138 10,049 Growth % (7%) 21% Operating Ratio 74% 74% EBITDA ($m)
Slide 24: Coal
COAL HY12 HY11 Operating metric HY12 HY11 Tonnages (million) 97.5 99.6 Revenue / NTK (A$/000 NTK) 43.2 39.5 NTK (billion) 22.0 22.6 Opex(1) / NTK (A$/000 NTK) 36.9 35.1 Revenue ($m) 949.9 895.7 Operating Ratio(2) 85% 89% Growth % 6% 3% Key Drivers EBITDA ($m) 233.6 202.9 Reduced QLD tonnages due t
Slide 25: Freight
FREIGHT HY12 HY11 Operating metric HY12 HY11 Tonnages (million) 32.9 32.7 Revenue / NTK (A$/000 NTK) 73.8 68.5 NTK (billion) 9.9 10.0 Opex(1) / NTK (A$/000 NTK) 71.0 67.0 Revenue ($m) 731.8 685.4 Operating Ratio(2) 96% 98% Growth % 7% 18% Key Drivers EBITDA ($m) 62.0 43.2 Investment in capacity ah
Slide 26: FY12 Guidance
FY12 GUIDANCE Coal volumes in HY12 impacted by production issues for our customers including the lingering impacts of the 2011 QLD floods as well as industrial relations issues Our current view is that we will deliver ~200mt – the low end of previous guidance provided. This is subject to normal
Slide 27: Medium to Long Term Outlook
MEDIUM TO LONG TERM OUTLOOK LANCE HOCKRIDGE – MD & CEO
Slide 28: Leveraged to Global Growth Sectors
LEVERAGED TO GLOBAL GROWTH SECTORS Thermal Coal Metallurgical Coal Global thermal coal imports Australian Exports of Metallurgical Coal Rest of World Million Tonnes Million Tonnes China and India 1,200 200 CAGR +7% CAGR +2% 1,000 150 800 600 100 400 50 200 0 0 2010 2011 2012 2013 2014 2015 2010 2011
Slide 29: Port Capacity Potential Across Australia's Coal Systems
PORT CAPACITY POTENTIAL ACROSS AUSTRALIA’S COAL SYSTEMS (MTPA) Current Committed Proposed Name Proposed Growth Plate Name Investment Name Plate Newlands/ Abbot Point 50 0 335 385 NML/Galilee Dalrymple Bay 85 0 0 Goonyella Hay Point 44 11 0 320 Dudgeon Point 0 0 180 Blackwater/ RG Tanna 70 0 0 Moura
Slide 30: Prospective Growth Projects
PROSPECTIVE GROWTH PROJECTS Pilbara Bowen Galilee Basin Basin Mid West Surat Basin Yilgarn 30
Slide 31: Questions
QUESTIONS
Slide 32: Additional Slides
ADDITIONAL SLIDES 7, <4" QR NATIONAL.
Slide 33: Reconciliation of Statutory Profit & Loss
RECONCILIATION OF STATUTORY PROFIT & LOSS HY11 HY12 Statutory Underlying Proforma Statutory Underlying Proforma Statutory EBIT 131.4 131.4 131.4 260.2 260.2 260.2 Transaction related costs - 95.0 95.0 - (8.8) (8.8) Timing related revenue: - 2009 Revenue Cap - - (16.5) - - - - 2011 Revenue Cap - - 21
Slide 34: Reconciliation of Statutory Profit & Loss
RECONCILIATION OF STATUTORY PROFIT & LOSS FY11 vs FY12 Half Year Profit & Loss HY11 HY12 Underlying Significant Underlying Significant $Am Actual Actual result items result items Revenue 1,747.6 0.0 1,747.6 1,766.9 0.0 1,766.9 Consumables(1) (745.9) 0.0 (745.9) (720.8) 0.0 (720.8) Employee benefits
Slide 35: Key Priorities for Driving Performance Excellence
KEY PRIORITIES FOR DRIVING PERFORMANCE EXCELLENCE Safety Revenue Quality Cost, Efficiency & Productivity Capital Efficiency Growth 35
Slide 36: Galilee Basin
GALILEE BASIN The proposed Central Queensland Integrated Rail Project granted a project of “State Significance” on 27 January 2012 Multi-user access, combining “brownfield” and “greenfield” solutions servicing the Central and South Galilee Basin The Galilee Basin has at least five major coal m
Slide 37: Surat Basin Joint Venture
SURAT BASIN JOINT VENTURE The “Southern Missing Link” - a 214 kilometre railway that will enhance the existing coal rail network The open-access, multi-user rail link between Wandoan and Banana is key to strategic development, unlocking approximately 5.4bn tonnes of coal reserves Connecting to