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Australia's Aurizon sees good growth in coal after exiting freight

[QUEENSLAND] Coal rail operator Aurizon Holdings Limited said on Monday it had decided to quit its loss-making freight business, selling two units for A$220 million (S$236.6 million) and closing a third arm, allowing it to focus on coal haulage.

Aurizon saw strong growth for its core coal business, which had been overshadowed by the freight business's failure to make a profit over all but three of the past 10 years, Chief Executive Andrew Harding said.

Core earnings before interest and tax (EBIT) would grow between A$900 million and A$960 million in 2018, or as much as 15 per cent stronger than 2017 without the freight drag, the company said.

Mr Harding said the freight business, which involves rail and trucking, was "something that has needed to be fixed for a very long time and will probably take a very long time to fix".

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Aurizon said it would sell its Queensland rail and road freight business to a consortium of Linfox and Pacific National and its Acacia Ridge Intermodal Terminal separately to Pacific National, as it has been unable to build a customer base for the business that competes with trucking.

The remainder of its intermodal business outside of the state of Queensland would be closed at the end of December, resulting in the loss of 250 jobs.

It also said it expected above rail coal haulage in 2018 to come in between 215 million tons per annum (mtpa) and 225 mtpa, up from 198.2 mtpa in 2017. Volume in 2017 was dented by a cyclone which hit coal mines and Aurizon's rail lines in late March.