Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — QR National — RBS Morgans Annual Queensland Conference 2011
26 slides from Aurizon's conference presentation, Sep 14, 2011
Slide 1: RBS Morgans Annual Queensland Conference
RBS Morgans Annual Queensland Conference Ken Lewsey EVP & CEO QR National Freight James Beirne General Manager Enterprise Planning and Performance 14th -16th September 2011
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: QR National's Footprint
QR NATIONAL’S FOOTPRINT Queensland DARWIN bulk, regional freight & QR National above rail operations intermodal QR National below rail track (CQCN) Cairns Northern Townsville Queensland Port Hedland Territory Mt Isa coal systems Dampier QRN Above Rail Freight Footprint Mackay Alice Springs Queenslan
Slide 4: QR National's Journey: GOC to Publicly Listed
QR NATIONAL’S JOURNEY GOC to PUBLICLY LISTED TRANSFORMATION GROWTH 4
Slide 5: QR National Strategy: Transformation & Growth
QR NATIONAL STRATEGY TRANSFORMATION & GROWTH 1. Achieve excellence in customer service 2. Establish an accountable, performance-based culture 3. Improve asset utilisation and return on capital 4. Leverage and expand our leadership position in coal 5. Pursue opportunities for growth and diversificati
Slide 6: Transformation
Transformation €£D aR NATIONAL.
Slide 7: Key Elements for Transformation
KEY ELEMENTS FOR TRANSFORMATION Safety • 50% reduction in LTIFR in FY11 - safety performance Commercial outcomes • Revenue quality uplift in coal Customer service • 29% QLD contracted coal volumes on new contracts in FY11 • Payload increases - Blackwater 5% and Goonyella 6% since Performance Februar
Slide 8: Safety: Lead Indicator for Performance
SAFETY LEAD INDICATOR FOR PERFORMANCE Safety is QR National’s core value and highest priority Good safety performance is good business Improvements reflect changing culture and operating discipline Achieved 50% improvement in LTIFR to 3.08 8
Slide 9: Focus on Productivity & Service
FOCUS ON PRODUCTIVITY & SERVICE 10,500 10,500 CQCN CQCN Payloads Payloads (tonnes) (tonnes) Goonyella 10,000 10,000 Goonyella New operating model established in 9,500 9,500 Capricornia and Goonyella Central Queensland coal systems 9,000 9,000 8,500 8,500 8,000 8,000 Blackwater Blackwater 7,500 7,500
Slide 10: Organisational Restructure
ORGANISATIONAL RESTRUCTURE FROM A LINE OF BUSINESS TOWARDS A FUNCTIONAL MODEL Rigid business unit silos Integration and collaboration Internal focus Corporate focus on customers Efficiency limitations Driving further efficiencies Impeding transformation effort Facilitate QR National’s transformation
Slide 11: Growth
Growth
Slide 12: Growth Strategy: FY11 Execution
GROWTH STRATEGY FY11 EXECUTION • Coal contracts for 26mta Contract wins • Hunter Valley ~ 30% market share contracted in FY12 • Iron Ore contracts for ~30mtpa • 70 million tonnes of expansion under construction Capital Investment •$440m investment in new rollingstock •Network investment of $692m in
Slide 13: Wiggins Island Rail Project
WIGGINS ISLAND RAIL PROJECT One of the largest rail expansions in Australia with ~$900m total investment QR National will deliver a series of rail infrastructure projects to allow 27 mtpa of coal to be transported to WICET Represents a significant commitment to the future growth of the Queensland co
Slide 14: GAP – On Schedule & On Budget
GAP – ON SCHEDULE & ON BUDGET Increasing capacity through Goonyella and Newlands system to Port of Abbott Point by 33mta with railings commencing January 2012 Construction of the Northern missing Link – 74kms A major upgrade and expansion of existing Newlands Coal System Capacity enhancements within
Slide 15: Hunter Valley Out-Performance
HUNTER VALLEY OUT-PERFORMANCE QR National Coal – NSW Volumes /Market share Volume (LHS), Market share (RHS) Effectively implementing strategy with 50 ~30% 30 cornerstone customers 45 22% 25 40 35 18% 20 30 14% 14% 25 15 Superior project management capability with 20 10 contract conditions 15 10 5 5
Slide 16: Iron Ore Growth
IRON ORE GROWTH 30 Success in securing iron ore contracts in WA 25 20 New agreements will underpin Mt Gibson Iron volumes of 30mta 15 Cliffs MRL 10 Karara Improved reliability performance with Cliffs to >95% 5 0 QR National is well positioned to FY11 FY12 FY13 FY14 pursue iron ore opportunities in W
Slide 17: Capital Investment FY11
CAPITAL INVESTMENT FY11 QR National’s capital expenditure* ($m) • Growth capital spend of $3.5bn over the past 4 years to FY11 • FY11 breakdown: • GAPE $460m • Blackwater $86m • Other Network projects $135m • New Coal rollingstock $352m • Iron Ore $105m • Other $202m 17 *Capex totals exclude capital
Slide 18: 2011 Financial Overview
2011 Financial Overview QR NATIONAL.
Slide 19: Highlights
HIGHLIGHTS 19
Slide 20: Upward Trend
UPWARD TREND Coal Volumes Revenue mt $m 218.81 4,000 220 198.4 184.1 186.7 3,500 3,294 2,973 170 181.6 3,000 2,605 2,500 2,344 120 2,000 1,500 70 1,000 500 20 0 -30 2008 2009 2010 2011 2008 2009 2010 2011 Underlying EBITDA Underlying EBIT $m $m 900 813 600 800 696 500 700 600 400 367 484 500 300 272
Slide 21: Flood and Cyclone Impact Offset by Transformation Upside
FLOOD AND CYCLONE IMPACT OFFSET BY TRANSFORMATION UPSIDE 500 450 400 187 16 350 7 11 15 300 45 250 460 200 367 150 100 50 0 FY11 Offer Wet Weather Coal Revenue Coal DTC Coal Other Freight Corporate FY 11 Document Impact Quality Savings Underlying EBIT 21
Slide 22: Outlook
Outlook
Slide 23: Outlook FY12
OUTLOOK FY12 • Softer coal volumes in Queensland Downside risks • Lack of certainty on production and hence volumes • Weather will be a significant swing factor • Continued NSW coal growth Upside • Continued revenue quality uplift opportunities • Ongoing gains from Transformation • Capability to mee
Slide 24: Leveraged to Global Growth Sectors
LEVERAGED TO GLOBAL GROWTH SECTORS Thermal Coal Metallurgical Coal Iron Ore Global thermal coal imports … Australian Exports of Metallurgical Coal Australian Exports of Iron Ore Million Tonnes Million Tonnes 1,000 220 600 900 +8% +9% +21% 180 500 800 700 400 140 600 500 300 100 400 300 200 60 200 10
Slide 25: Positive Expectations
POSITIVE EXPECTATIONS World crude steel production was 127 million metric tons (mmt) in July 2011 - 11.5% higher than pcp. China’s crude steel production for July 2011 was 59.3 mmt, an increase of 15.5% compared to pcp. 25 SOURCE: World Steel Association – July 2011 Report
Slide 26: Questions
— We eg & > 1 Questions
QR National — RBS Morgans Annual Queensland Conference 2011 on 6ix