Freight company Aurizon is cutting back on rail stock and will also take a financial hit from the cancellation of a major project in Queensland.
Freight and coal haulage operator Aurizon will take a hit of almost $200 million as it cuts the size of its rail fleet and cancels a major Queensland project.
The company, previously known as QR National, is reducing its locomotive fleet by 28 per cent and cutting the number of wagons by 12 per cent in a bid to bring down fuel and maintenance costs.
Aurizon’s downsizing will appear as an asset impairment expense of $130 million to $150 million in its accounts for the first half of the 2013/14 financial year.
The company will also incur a $47 million impairment on recent changes to several projects, including Glencore Xstrata’s decision to stop the Wandoan project because of weakening thermal coal prices.
Aurizon had proposed a 210 kilometre Surat Basin rail corridor from the Wandoan mine in a joint venture with the Swiss multinational.
“There’s not any job losses that are related to that,” chief executive Lance Hockridge told reporters on Monday.
In July, Aurizon launched a second voluntary redundancy program in a bid to save $230 million by 2015.
Some 248 voluntary redundancies have since been accepted.
“I think the bulk of it is done,” Mr Hockridge said.
More than 2,000 employees have left the company since it was privatised by the former Queensland Labor government in 2010.
Mr Hockridge said he was “cautious but confident” about the thermal coal sector, as well as the future of projects in Queensland’s Galilee Basin, where Aurizon has agreed to develop a rail project for the GVK-Hancock joint venture involving billionaire Gina Rinehart.
Aurizon shares dropped two cents to $4.68.