Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — Investor Day (July 2023)
68 slides from Aurizon's investor day presentation, Jul 18, 2023
Slide 1: Aurizon Investor Day Presentation
Aurizon Holdings Limited ABN 14 146 335 622 ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT 18 July 2023 Aurizon Investor Day Presentation Please find attached an ASX announcement including a copy of the 2023 Investor Day Presentation slides for release
Slide 2: ASX Announcement: Aurizon Investor Day, Darwin
ASX Announcement Date: 18 July 2023 Aurizon Investor Day, Darwin Aurizon today is providing a presentation at an Investor Day in Darwin, attached, detailing progress in delivering on the Company’s strategy, business and operational performance, and further opportunities to grow in the Bulk and Conta
Slide 3: Commentary from the Managing Director & CEO Andrew Harding
Commentary from the Managing Director & CEO Andrew Harding: Managing Director & CEO Andrew Harding said: “With targeted investment and business growth, Aurizon has continued to build upon our position as Australia's leading integrated rail provider. This has been strengthened by our acquisition of O
Slide 4: Aurizon Investor Day July 2023
Aurizon Investor Day 18 July 2023
Slide 5: Disclaimer
AURIZON INVESTOR DAY 2023 Disclaimer NO RELIANCE ON THIS DOCUMENT SCENARIO ANALYSIS This document was prepared by Aurizon Holdings Limited (ACN 146 335 622) (referred to as “Aurizon” which includes its related This document also describes Aurizon’s approach to scenario analysis of long-term coal sce
Slide 6: Important Information about this presentation
AURIZON INVESTOR DAY 2023 Important Information about this presentation Aspirational statements This presentation contains aspirational statements, which are high-level vision statements, in particular about Aurizon's strategic aims for its Bulk and Containerised Freight businesses. In setting these
Slide 7: Acknowledgement of Country
AURIZON INVESTOR DAY 2023 Acknowledgement of Country Artwork created by Aurizon employee and proud Kalkadoon/Waiben Man Laurie Anno in partnership with fellow members of Aurizon’s Indigenous Reference Group (IRG). Each IRG member contributed to the artwork with finger dot painting, giving meaning to
Slide 8: Safety Share: Initiative
AURIZON INVESTOR DAY 2023 Safety Share: Initiative 5
Slide 9: Group Executive Team
AURIZON INVESTOR DAY 2023 Group Executive Team Andrew Harding Pam Bains Anna Dartnell George Lippiatt Managing Director & CEO Group Executive Network Group Executive Bulk CFO & Group Executive Strategy Gareth Long Ed McKeiver Cat Peppler Group Executive Containerised Freight Group Executive Coal Gro
Slide 10: Agenda
AURIZON INVESTOR DAY 2023 Agenda Time (ACST) Topic Presenter Andrew Harding 1 2:00pm – 2:30pm Overview and Strategic Aims Managing Director & CEO Gareth Long 2 2:30pm – 2:50pm Containerised Freight Group Executive Containerised Freight 2:50pm – 3:10pm Break Anna Dartnell 3 3:10pm – 3:30pm Bulk Group
Slide 11: Key messages for today
AURIZON INVESTOR DAY 2023 Key messages for today Consistently returned Australia’s leading integrated rail provider Network and Coal capital to shareholders, 5,130km track infrastructure; businesses are resilient, with $5 billion returned ~700 locomotives; ~15,000 wagons; generating free cash flow s
Slide 12: FY2023 EBITDA will be delivered within the guidance range, albeit towards the lower end
AURIZON INVESTOR DAY 2023 FY2023 FY2023 EBITDA will be delivered within the guidance range, albeit towards the lower end FY2023: › Group underlying EBITDA will be delivered within the guidance range ($1,420m – $1,470m), albeit towards the lower end due to prolonged wet weather, mine production and s
Slide 13: FY2024 EBITDA expected to be $1,590m - $1,680m
AURIZON INVESTOR DAY 2023 FY2024 FY2024 EBITDA expected to be $1,590m - $1,680m FY2024: › Group underlying EBITDA expected to be in the range of $1,590m – $1,680m › Sustaining capex expected to be $600-$660m (including ~$40m of transformational project capital) › Growth capex expected to be $250-$30
Slide 14: Overview and Strategic Aims
Overview and Strategic Aims Andrew Harding
Slide 15: About Aurizon
AURIZON INVESTOR DAY 2023 About Aurizon Following the acquisition of One Rail, Aurizon's operational footprint covers mainland Australia, with over 5,000km of track infrastructure and the largest fleet of locomotives and wagons 5,130km ~700 ~15,000 track infrastructure locomotives wagons 85% Inflati
Slide 16: ESG contribution
AURIZON INVESTOR DAY 2023 ESG contribution Rail is playing a significant role in the transition to a low-carbon economy Environment Safety Productivity Emissions Infrastructure 95% less 150 Productivity Net Zero Investment carbon emissions (per tonne equivalent semi-trailer trucks Economic and produ
Slide 17: Exposure to new economy commodities
AURIZON INVESTOR DAY 2023 Exposure to new economy commodities Aurizon is the pre-eminent freight rail provider in Australia with a market leading position in key commodities Bulk Coal Bauxite Copper Iron ore Nickel Phosphate Rare earths Wheat Met. Coal Thermal Coal Batteries, Aluminium: transport, B
Slide 18: Progress against historical strategic aims
AURIZON INVESTOR DAY 2023 Progress against historical strategic aims1 The acquisition of One Rail and new contract wins provide a step change in achieving our previously stated strategic aims June 2021 Resilient Coal and Network businesses Growing bulk business with new markets Evolving mix reduces
Slide 19: Repositioning Containerised Freight
AURIZON INVESTOR DAY 2023 Repositioning Containerised Freight After exiting an inferior Intermodal position in 2017, Aurizon has stood up a Containerised Freight network that can enhance national supply chains FY18 FY18-FY22 FY23 FY24 FY25 FY26-FY30 › Exited loss-making › Improved core Network, › Ac
Slide 20: Land-bridging in-context
AURIZON INVESTOR DAY 2023 Land-bridging in-context Land-bridging is a natural extension of Aurizon’s Bulk and Containerised Freight businesses, leveraging existing assets to capture growth opportunities and increase haulage volumes Bulk Land-bridging Containerised Freight › Large network of flexible
Slide 21: Land-bridging opportunity
AURIZON INVESTOR DAY 2023 Land-bridging opportunity Existing underdeveloped regional ports and incumbent rail infrastructure connecting to major cities in Australia can support a land-bridging solution ILLUSTRATIVE CONTAINERISED FREIGHT FLOW THE LAND-BRIDGING OPPORTUNITY › Existing but underdevelope
Slide 22: Updated strategic aims
AURIZON INVESTOR DAY 2023 Updated strategic aims Resilient Network and Coal businesses continue to support (now increased) aspirations for Bulk and the establishment of a nationally significant containerised freight supply chain Resilient Coal and Drive Bulk growth Establish nationally significant N
Slide 23: Containerised Freight
Containerised Freight Gareth Long
Slide 24: Containerised Freight introduction
AURIZON INVESTOR DAY 2023 Containerised Freight introduction Aurizon is ramping up to a national containerised freight capacity of 350k TEU in 2024 National Interstate Central Corridor Land-bridging ~200k TEU1 ~150k TEU2 NEW Capacity (per annum) Capacity (per annum) › Utilising regional ports with a
Slide 25: Containerised Freight – Market Size
AURIZON INVESTOR DAY 2023 Containerised Freight – Market Size The existing interstate containerised freight market is an attractive value pool which, until recently, was largely untapped for Aurizon beyond the Central Corridor INTERSTATE SEGMENT OVERVIEW 1 RAIL FREIGHT ~1.0m ROAD FREIGHT TEU PER ANN
Slide 26: National Interstate containerised freight growth
AURIZON INVESTOR DAY 2023 National Interstate containerised freight growth The Bureau of Infrastructure and Transport Research Economics (BITRE) projects the domestic (non-bulk) rail freight market to grow by 2.5% pa. (2020-2050) in the base scenario TOTAL: AUSTRALIA INTERSTATE NON-BULK RAIL FREIGHT
Slide 27: National Interstate
AURIZON INVESTOR DAY 2023 National Interstate Twenty services operated to date with zero cancellations and volume utilisation at over 80%. Noting train length will increase over coming months Activities to date to support ramp up: › First service stood up in 7 weeks post contract signing 29 return s
Slide 28: Containerised Freight demand
AURIZON INVESTOR DAY 2023 Containerised Freight demand Aurizon’s initial engagement with prospective customers has provided insight to future demand PROSPECTIVE CUSTOMER AND MARKET SIGNALS TO DATE INDICATION OF TYPES OF SOLUTIONS …clear customer need and demand for new ‘partnering’ approach Solution
Slide 29: Land-bridging – leveraging Aurizon's existing capabilities
AURIZON INVESTOR DAY 2023 Land-bridging – leveraging Aurizon’s existing capabilities Darwin’s proximity to Asia combined with Aurizon’s key assets and capacity make it a logical location to explore a land-bridging solution AURIZON’S EXISTING CAPABILITIES › Containerised Freight provides rail linehau
Slide 30: Land-bridging – benefits in an Australian context
AURIZON INVESTOR DAY 2023 Land-bridging – benefits in an Australian context Land-bridging offers an alternative supply chain that can potentially enhance the predictability and speed of container deliveries while generating capital efficiencies for shipping lines Potential For Reduced Journey Times1
Slide 31: Land-bridging – global case studies
AURIZON INVESTOR DAY 2023 Land-bridging – global case studies Land-bridging is supported by global case studies that have been successfully implemented KEY SUCCESS FACTORS Application Prince Rupert Port to Darwin Closest North American port to Asia. Deepest natural harbour of the North American port
Slide 32: Containerised Freight opportunity
AURIZON INVESTOR DAY 2023 Containerised Freight opportunity Land-bridging Stage One capacity is intended to roll-out in FY2025, with subsequent growth assessed in a staged approach, responding to demand from freight owners and shippers Operating Planned Aspiration Assess Opportunities 350k TEU 450k
Slide 33: Containerised Freight aspiration
AURIZON INVESTOR DAY 2023 Containerised Freight aspiration Aurizon has an aspiration to grow the Containerised Freight business, and deliver value for our customers and shareholders through increased capacity, reliability, and service frequency LEVERS TO INCREASE VALUE CONTAINERISED FREIGHT ASPIRATI
Slide 34: Containerised Freight – Key takeaways
AURIZON INVESTOR DAY 2023 Containerised Freight – Key takeaways National Interstate Land-bridging Attractive interstate Engagement with prospective Natural extension of Offers an alternative supply Containerised Freight customers providing robust Aurizon's Bulk and chain that can potentially value p
Slide 35: Bulk
Bulk. Anna Dartnel x £2? AURIZON,
Slide 36: Bulk operations
AURIZON INVESTOR DAY 2023 Bulk operations Aurizon’s Bulk operations have grown significantly in recent years, in line with our Bulk ambitions as outlined at the 2021 Investor Day OVERVIEW › Aurizon Bulk incorporates both upstream and downstream services to provide transport and logistical solutions
Slide 37: Turnaround to growth
AURIZON INVESTOR DAY 2023 Turnaround to growth Turnaround Springboard Grow Loss making (EBIT) in FY17 Production to port capability Proactive opportunity management Focus of first 5 years was on Increased footprint with operating the business better investment in One Rail Build and acquire key capab
Slide 38: Bulk business at a glance
AURIZON INVESTOR DAY 2023 Bulk business at a glance Aurizon's infrastructure footprint has grown substantially over the past three years to support bulk commodity haulage Trucks Locomotives Wagons Rail Infrastructure Port Terminal Access Stevedoring as at 31 December 10 171 2,095 nil nil nil 2019
Slide 39: Bulk: Australian mine projects
AURIZON INVESTOR DAY 2023 Bulk: Australian mine projects There are over 1,400 mine projects1 across Australia, with copper, iron ore and nickel the dominant commodities. As these develop it will further diversify and drive Aurizon Bulk growth Bulk: Australian mine projects1 Bulk Revenue: By Commodit
Slide 40: Bulk Central
AURIZON INVESTOR DAY 2023 Bulk Central Mine projects1 Frances Nolans Wonarah Jervois RARE EARTHS PHOSPHATE COPPER Creek Arafura Resources Avenira KGL Resources IRON ORE Linecrest Warrego Hawks Nest Tivan Plant Ammaroo VANADIUM | TITANIUM IRON ORE IRON ORE PHOSPHATE IRON ORE Northern Iron Peak Iron T
Slide 41: Focus on grain
AURIZON INVESTOR DAY 2023 Focus on grain Aurizon is Australia’s largest hauler of grain and is primarily exposed to the stable export facing regions of Western Australia and South Australia GLOBAL WHEAT EXPORT VOLUME (2022-23)1 WESTERN AUSTRALIA: CROP PRODUCTION VOLUME2 30mt › Most stable grain expo
Slide 42: Growth in new markets
AURIZON INVESTOR DAY 2023 Growth in new markets Aurizon has a track record of securing new bulk haulage contracts Tronox Centrex GRA Gypsum › Started in 2022 › Started in 2022 › $20m upgrade of Aurizon-leased track between Kevin (SA) and Thevenard › Train services commenced connecting › A true integ
Slide 43: Bulk: FY2030 aspiration
AURIZON INVESTOR DAY 2023 Bulk: FY2030 aspiration Aspiration to achieve a 25-30% share of the estimated addressable bulk (EBITDA) market of ~$1.7 billion at FY20301 Investor Day: 2021 Investor Day: 2023 Drive Bulk growth Our aspiration to achieve across national footprint 20-25% 25-30% Market size ~
Slide 44: Bulk – Key takeaways
AURIZON INVESTOR DAY 2023 Bulk – Key takeaways Updated FY2030 Infrastructure footprint Focused on hauling Existing fleet scale and aspiration driven by has grown to support commodities associated flexibility supports acquisition of One Rail Bulk haulage volume with economic growth, growth opportunit
Slide 45: Capital allocation & Aurizon fleet
Capital allocation & Aurizon fleet George Lippiatt
Slide 46: Capital allocation framework
AURIZON INVESTOR DAY 2023 Capital allocation framework Aurizon’s capital allocation framework is designed to maximise shareholder value and has seen $5bn returned to shareholders since FY16 CAPITAL ALLOCATION HIERARCHY CAPITAL MANAGEMENT MINIMUM IRR3 TARGETS (%) Bulk & CF2 › Opportunities if there i
Slide 47: Application of framework
AURIZON INVESTOR DAY 2023 Application of framework Aurizon has consistently returned capital to shareholders, while balancing sustaining capex to maintain operations, and investing in attractive growth opportunities HISTORICAL ALLOCATION OF AVAILABLE CAPITAL ($M) 1,535 Annual 340 634 699 720 725 734
Slide 48: Assessing capital for Bulk strategic aim
AURIZON INVESTOR DAY 2023 Assessing capital for Bulk strategic aim Aurizon will continue to utilise its capital allocation framework and key asset positions to support the strategic aims outlined today Drive Bulk growth across national footprint Our aspiration to achieve Growth Capital2 25-30% ~$6
Slide 49: Assessing capital for Containerised Freight strategic aim
AURIZON INVESTOR DAY 2023 Assessing capital for Containerised Freight strategic aim Aurizon will continue to utilise its capital allocation framework and key asset positions to support the strategic aims outlined today Key: Each icon represents 50k annual TEU capacity Central Corridor National Inter
Slide 50: Strategy In Uncertainty and commodity growth
AURIZON INVESTOR DAY 2023 Strategy In Uncertainty and commodity growth1 Aurizon's Strategy In Uncertainty uses scenarios to test commodity market drivers and inform decision making Strategy in Uncertainty: Scenario analysis to enable the business to evaluate capital, fleet and haulage opportunities,
Slide 51: Strategy In Uncertainty and commodity growth
AURIZON INVESTOR DAY 2023 Strategy In Uncertainty and commodity growth1 Bulk commodity demand is leveraged to Asian economic growth and the global energy transition. Bulk Central has increased Aurizon’s exposure to key commodities Bulk West Bulk Central Bulk East Key commodities and drivers Key comm
Slide 52: Strategy In Uncertainty and commodity growth
AURIZON INVESTOR DAY 2023 Strategy In Uncertainty and commodity growth1 Updated scenarios (including the acquisition of One Rail) and the establishment of Containerised Freight indicate an overall positive impact on the previously provided modelled cash flow range Modelled 20-Year Volumes: Movement
Slide 53: Aurizon fleet position
AURIZON INVESTOR DAY 2023 Aurizon fleet position Fleet scale and flexibility supports cashflows and growth opportunities nationally ~80 Darwin FLEET REDEPLOYMENTS – COAL TO BULK ~320 ~1,150 Incl. 138 (Electric) Since 2021, Aurizon’s flexible fleet has allowed for the redeployment of Coal assets to t
Slide 54: Aurizon fleet position
AURIZON INVESTOR DAY 2023 Aurizon fleet position Examples of recent fleet investments and redeployments delivering value New Investments Standard gauge locomotives Flatbed wagons LZ Locomotive reinstatements › 10 already received with additional 20 on order › 500 received › Returning to service 4 x
Slide 55: Aurizon fleet position and decarbonisation
AURIZON INVESTOR DAY 2023 Aurizon fleet position and decarbonisation Decarbonising Aurizon’s fleet will likely require three platforms that we will develop, trial and embed in our operations before large scale rollout of successful solutions1 Zero Emission platforms CORRIDOR ENERGY REQUIREMENTS VS A
Slide 56: Bank and insurance support
AURIZON INVESTOR DAY 2023 Bank and insurance support Aurizon continues to be well supported in both bank and insurance markets Banking group increased over time and Net debt / EBITDA remains Insurance cost over time has bank debt margin has reduced conservative decreased Operations: Number of Lender
Slide 57: Capital allocation and Aurizon fleet – Key takeaways
AURIZON INVESTOR DAY 2023 Capital allocation and Aurizon fleet – Key takeaways Capital allocation Recent investments and Investments are Fleet scale and flexibility framework is unchanged installed capacity are key positioned to benefit combined with ongoing and has seen $5bn drivers for Bulk and fr
Slide 58: Key messages for today
AURIZON INVESTOR DAY 2023 Key messages for today Consistently returned Australia’s leading integrated rail provider Network and Coal capital to shareholders, 5,130km track infrastructure; businesses are resilient, with $5 billion returned ~700 locomotives; ~15,000 wagons; generating free cash flow s
Slide 59: Aurizon
> 4? AURIZON.
Slide 60: Appendix
Appendix
Slide 61: Aurizon Port Services - Darwin
AURIZON INVESTOR DAY 2023 Aurizon Port Services - Darwin Aurizon Berrimah Terminal ORA Berrimah Rail Terminal East Arm Wharf 338 Berrimah Rd, East Arm (29.75ha) Lease from Darwin Port Leasehold to Aurizon Bulk Central (Exp Corporation 19.04.2054) Expires: 14 Jan 2054 Darwin Port Lease N 58
Slide 62: Tarcoola-Darwin: Below rail infrastructure
AURIZON INVESTOR DAY 2023 Tarcoola-Darwin: Below rail infrastructure A critical piece of rail infrastructure to support long-term growth aspirations OVERVIEW TRACK INFRASTRUCTURE › Economic owner of two long term rail concessions covering 2,460km1 of track across South Australia and Northern Territo
Slide 63: Network: Maximum Allowable Revenue
AURIZON INVESTOR DAY 2023 Network: Maximum Allowable Revenue The Maximum Allowable Revenue (MAR) is the total regulatory revenue Aurizon Network is permitted to earn each year PRELIMINARY ALLOWABLE REVENUE ($m)1 Building block component 2023/24 2024/25 2025/26 2026/27 RETURN ON CAPITAL Return (Weigh
Slide 64: Aurizon's Strategy in Uncertainty framework
AURIZON INVESTOR DAY 2023 Aurizon's Strategy in Uncertainty framework Strategy In Uncertainty uses scenarios to test market drivers and evaluate capital, fleet and haulage opportunities OUR APPROACH STRATEGY IN UNCERTAINTY: KEY DRIVERS Metallurgical coal Thermal coal Australia coal Australia Bulk de
Slide 65: Coal Strategy In Uncertainty Scenarios
AURIZON INVESTOR DAY 2023 Coal Strategy In Uncertainty Scenarios1 Commodity Strong Current Economics Australia Market Share Loss Carbon Constrained Asia Mine/Reg. Constrained Aust. Rapid Decarbonisation High case seaborne demand BOF-BF share of crude steel Major coal exporters, global Lower GDP grow
Slide 66: Bulk Strategy In Uncertainty Scenarios
AURIZON INVESTOR DAY 2023 Bulk Strategy In Uncertainty Scenarios1 Commodity Strong Current Economics Australia Market Share Loss Rapid Decarbonisation • Stronger GDP growth in Asia • China steel production remains above 800mtpa • Australia’s cost competitiveness declines, • Accelerated implementatio
Slide 67: Aurizon: Below rail infrastructure
AURIZON INVESTOR DAY 2023 Aurizon: Below rail infrastructure Australian Rail Infrastructure Management (kilometres) 8,500km 6,600km 5,500km 5,130km 3,520km 2,386km 1,599km 1,700km 998km 1,000km 760km 611km 344km Roy Hill (Pilbara) TasRail Fortescue Metro Trains BHP (Pilbara) Sydney Trains Rio Tinto
Slide 68: Glossary
AURIZON INVESTOR DAY 2023 Glossary Metric Description Access Revenue Amounts received by Aurizon Network for access to the Network infrastructure under all Access Agreements AFD Access Facilitation Deed Average haul length NTK/Total tonnes Contract utilisation Total volumes hauled as a percentage of