Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — Investor Presentation (December 2013)
33 slides from Aurizon's investor presentation, Dec 16, 2013
Slide 1: ASX announcement cover letter
Dominic D Smith Senior Vice President & Company Secretary Aurizon Holdings Limited ABN 14 146 335 622 T +61 7 3019 9000 F +61 7 3019 2188 E CompanySecretary@aurizon.com.au W aurizon.com.au Level 17, 175 Eagle Street Brisbane QLD 4000 GPO Box 456 Brisbane QLD 4001 For personal use only ASX Market Ann
Slide 2: Aurizon Investor Briefing
For personal use only Aurizon Investor Briefing Monday 16th December 2013 Sydney
Slide 3: Disclaimer: Important notice
Disclaimer: Important notice For personal use only No Reliance on this document This document was prepared by Aurizon Holdings Limited (ACN 146 335 622) (referred to as “Aurizon” which includes its related bodies corporate). Whilst Aurizon has endeavoured to ensure the accuracy of the information co
Slide 4: Welcome & introduction
For personal use only Welcome & introduction Lance Hockridge – MD & CEO
Slide 5: Agenda
Agenda 1 MD & CEO - Lance Hockridge For personal use only – Welcome & introduction 2 EVP Operations – Mike Franczak – Operations update – The Integrated Operating Plan & Rollingstock Update 3 EVP & CFO – Keith Neate – Operating Ratio update – Impact of rollingstock and strategic projects reviews – Y
Slide 6: Key Messages
Key Messages For personal use only Market volumes remain strong in coal and iron ore in 1H FY2014 Progress towards 75% Operating Ratio in FY2015 remains on target Integrated Operating Plan (IOP) implemented and already delivering results The IOP implementation has been enabled by a number of
Slide 7: Integrated Operating Plan & Fleet Update
For personal use only Integrated Operating Plan & Fleet Update Mike Franczak – EVP Operations
Slide 8: July Investor Day highlighted the programs and right metrics
July 18 “Investor Day” highlighted the programs and right metrics to transform operations and For personal use only deliver value Transformational Productivity, Efficiency Creates Value for Programs and Service Metrics AZJ Recall key transformation • Gross Tonne Kilometres • Lower unit costs • Integ
Slide 9: The Operations transformation programs are gaining traction
The Operations transformation programs are gaining traction Indicators for Operations – rolling 12 months For personal use only Record volumes being Throughput – net tonnes1 Turnaround Time – hrs (Coal)2 hit… 285,000 30 Highest quarterly coal 25 Opportunity volume in Q1 of 53.5mt 270,000 Opportuni
Slide 10: Further examples of traction
Further examples of traction Indicators for Operations – rolling 12 months For personal use only The needle is moving… Fuel consumption – Litres/dGTK FTE productivity – NTK/FTE1 Key metrics are trending 4 1.10 in the right direction and Opportunity 1.05 unit cost improvements in Opportunity 3 line w
Slide 11: The Integrated Operating Plan is the cornerstone of Operations' transformation
The Integrated Operating Plan is the cornerstone of Operations‟ transformation For personal use only Integrated Operating Plan(1) Consolidated approach Supply chain Areas Example drivers • Optimise planning – better compliance in Mine Aurizon day of operations • Tighten schedule and improve turnarou
Slide 12: Aurizon is reviewing its IOP across its key national corridors
Aurizon is reviewing its Integrated Operating Plan (IOP) across its key national corridors For personal use only Aurizon‟s operations footprint Aurizon operations Do not operate Corridor optimisation is DARWIN underway… • Transform all Freight and Coal corridor operations Cairns to maximise producti
Slide 13: IOP corridor redesign has already identified significant productivity improvements
IOP corridor redesign has already identified significant productivity improvements For personal use only A corridor Optimisation opportunities to drive further productivity optimisation process is in place… Area of opportunity Description Identified benefit • Update scheduling practices to enable •
Slide 14: Aurizon is now in a position to revise its rollingstock fleet plan
Aurizon is now in a position to revise its rollingstock fleet plan due to two key drivers For personal use only Driver Description • Improvement in key operational metrics across Coal and Bulk Which means… IOP continued improvement in • Sustainability of improvement gives • Aurizon can operational c
Slide 15: The Enterprise Rollingstock Master Plan (ERSMP)
The Enterprise Rollingstock Master Plan (ERSMP) reflects demand and optimises capital investment and expense For personal use only ERSMP Development The goal of the ERSMP is to match customer demand with optimised rollingstock solutions, in accordance with Operating Plans, Maintenance/Life Cycle Pla
Slide 16: ERSMP key guiding principles and objectives
The ERSMP is underpinned by key guiding principles and objectives For personal use only ERSMP objectives ERSMP principles One common and transparent Rollingstock Plan Interoperability looking: Fungibility – Ahead 5 years Standardisation – At all Australian operations and activities – Ensurin
Slide 17: Aurizon's current rollingstock summary, as at July 2013
Aurizon‟s current rollingstock summary, as at July 2013 For personal use only As at July 2013 Locomotives Wagons Total 829 18,546 575 Locomotives • Active 628 15,163 162 Locomotives 12,449 wagons 4,308 Wagons 49 Locomotives • Stored 201 3,383 584 Wagons 43 Locomotives 1,205 wagons Average age (years
Slide 18: Our revised ERSMP provides a renewed view of fleet requirements
Our revised ERSMP provides a renewed view of fleet requirements For personal use only 5 year rollingstock fleet review (1) [ ] Approximate figures Delivered Locomotives on commitment… [-28%] Rollingstock plan has now been reviewed [308] [77] 829 [598] Informed by… FY13 fleet Not Required Estimated N
Slide 19: The revised ERSMP will drive additional productivity and efficiency benefits
The revised ERSMP will drive a range of additional productivity and efficiency benefits For personal use only Forecast fleet metrics(1) [ ] Approximate figures Locomotives Wagons Outcome Active Fleet Classes [-49%] [-38%] • Significant reduction in Benefits classes across Aurizon‟s 59 297 – Reduced
Slide 20: Summary
Summary For personal use only The transformation journey (organisational and cultural change, IOP, disciplined operations) is delivering significant operations improvements as seen in the key metrics These improvements have allowed Aurizon to revise its fleet disposal and procurement requirement
Slide 21: Finance update
For personal use only Finance update Keith Neate – EVP & CFO
Slide 22: Operating Ratio update
Operating Ratio update For personal use only 1H Operating Ratio Remain on track to deliver Operating Ratio % of 75% by FY2015 1H FY2014 volumes in coal & iron ore remain strong, partly offset by weaker 85.8 freight performance 85.0 81.0 • Network – access revenues fixed due to transitional tarif
Slide 23: Rollingstock Review
Rollingstock Review For personal use only 1H FY2014 results will include the financial impact of the Rollingstock Review Locomotives will either be written down to Net Realisable Value (NRV) and sold, or scrapped depending on age and type Wagons will generally be written down to scrap value Es
Slide 24: Strategic Projects Review
Strategic Projects Review For personal use only 1H FY2014 results will include the financial impact of the Strategic Projects Review Completed review of the current status of strategic projects, resulting in an impairment of $47m (pre-tax, subject to audit) in respect of the following: – Surat Bas
Slide 25: Transformation update
Transformation update For personal use only Headcount Voluntary Redundancy 1H acceptances FY2014 248 people have accepted Voluntary Redundancy (VR) since July 2013 Commercial & Marketing 30 VR cost estimated to be $23m - annualised benefit expected to be $26m Strategy & Business Development 18
Slide 26: Above rail volume update
Above rail volume update 5 months to 30 November 2013 For personal use only Coal Above rail volumes Queensland volumes up 14% with particular strength in the Five months ended 30 November Goonyella corridor (mt) 2013 2012 % Growth NSW volumes have increased 10% Queensland 73.6 64.6 14% We esti
Slide 27: Regulation & EA update
For personal use only Regulation & EA update Lance Hockridge – MD & CEO
Slide 28: UT4 Update
UT4 Update For personal use only Queensland Competition Authority (QCA) has received 11 stakeholder submissions in response to Aurizon Network‟s UT4 proposal Aurizon responded on 29 November 2013 to proactively address many of the key customer issues The UT4 process is ongoing and has included
Slide 29: Enterprise Agreements to be renegotiated before 30 June 2015
18 Enterprise Agreements to be renegotiated between now and 30 June 2015 For personal use only Expiry date Commence Agreements Employer covered 2013 2014 bargaining M A M J J A S O N D J F M A M J Interail Intermodal NSW EA 2009 Interail Australia Pty Ltd Feb 2013 30 June 2013 Completed Under Intera
Slide 30: QLD Enterprise Agreements (EA) update
QLD Enterprise Agreements (EA) update Aurizon is not looking for anything that our competitors haven't already secured For personal use only Our current environment To meet the challenges in achieving its bargaining Government owned legacy issues – no forced goals Aurizon has: redundancy, prescrip
Slide 31: Summary
Summary For personal use only Market volumes remain strong in coal and iron ore in 1H FY2014 Progress towards 75% Operating Ratio in FY2015 remains on target Integrated Operating Plan (IOP) implemented, and already delivering results The IOP implementation has been enabled by a number of fac
Slide 32: Q&A
For personal use only Q&A
Slide 33: Aurizon Investor Briefing
For personal use only Aurizon Investor Briefing Monday 16th December 2013 Sydney
Aurizon Holdings — Investor Presentation (December 2013) on 6ix