Key Highlights

• For the year ended 30 June 2026, Aurizon reported Revenue of $4,194 million, up 6 per cent, and underlying EBITDA of $1,724 million, up 9 per cent.

• Railed coal Volume was 192.0 million tonnes in FY2026, 0.2 million tonnes below the prior year, and Coal underlying EBITDA rose 2 per cent to $540 million.

• The full-year Dividend rose 46 per cent to 23.0 cents per share, and a $250 million on-market buy-back was completed.

• Network also plans a flood-related review event claim in the first quarter of FY2027 for about $4.5 million of repair costs at Moura, which is small in scale but indicates the weather exposure of the rail corridor.

Why would a rail operator forecast higher group Earnings while telling the market its biggest division will probably earn less? Aurizon's (ASX:AZJ) answer, delivered with its FY2026 results on 17 August 2026, is that growth in Network, Bulk and other businesses is expected to outweigh a moderation in Coal, where contracted volumes are lower. The guidance is a management expectation, not a promise, and it rests on several moving parts that are worth understanding.

The central development: FY2026 results and FY2027 guidance

For the year ended 30 June 2026, Aurizon reported revenue of $4,194 million, up 6 per cent, and underlying EBITDA of $1,724 million, up 9 per cent. Underlying EBIT rose 17 per cent to $985 million from $844 million, and underlying net profit after tax rose 24 per cent to $433 million. Underlying Earnings Per Share were 25.2 cents. Return on invested Capital improved to 9.5 per cent from 8.1 per cent.

The FY2027 guidance is underlying EBITDA of $1,725 million to $1,775 million and full-year dividends of 23.0 to 24.0 cents per share. Network, Bulk and Other are expected to rise, while Coal is expected to fall. The midpoint of the EBITDA range is only modestly above FY2026's $1,724 million, so the outlook implies steady rather than rapid earnings growth.

Business model and revenue drivers

Aurizon runs a regulated rail network, hauls coal, and operates bulk and freight businesses. Each segment has different drivers.

Coal is volume-driven and contract-based. Railed coal volume was 192.0 million tonnes in FY2026, 0.2 million tonnes below the prior year, and Coal underlying EBITDA rose 2 per cent to $540 million. That helps the visibility of future volumes, but the company still expects Coal earnings to fall in FY2027 on lower contracted volumes.

Network earnings depend on regulatory outcomes. Bulk, which includes a long-term logistics contract with BHP that began in October 2025, was a key contributor, with Bulk underlying EBITDA up 38 per cent according to the same summary. New vehicle logistics contracts with CEVA and NYK were also reported. Containerised freight volumes rose 25 per cent, and the company is targeting EBITDA break-even in FY2027, so this unit is still not contributing profit.

Capital management and balance sheet

The full-year dividend rose 46 per cent to 23.0 cents per share, and a $250 million on-market buy-back was completed. The final dividend went ex on 31 August 2026 and was payable on 23 September 2026.

Net Debt was steady at about $5.2 billion, and net debt to underlying EBITDA was 3.0 times, a slight improvement. Gearing was 57.0 per cent and total borrowings were $5,346 million. Leverage matters because capital returns have been sizeable. Dividend growth of 46 per cent outpaced underlying earnings per share growth of 29 per cent in FY2026. A $150 million club Facility also matures in June 2028.

Net cash from Operating Activities was $1,496 million, up 2 per cent. Growth Capital Expenditure was $146 million, compared with $107 million in FY2025. FY2027 guidance includes non-growth capital expenditure of $590 million to $660 million, including about $25 million of transformation capital, and growth capital expenditure of $70 million to $120 million.

Regulation: the UT5 access undertaking

Regulation is central to the Network division. On 22 December 2025, Aurizon Network submitted a voluntary draft amending access undertaking to extend the UT5 undertaking by 10 years, to 30 June 2037. The Queensland Competition Authority published a draft decision on 23 June 2026 and submissions closed on 20 August 2026.

The outcome affects allowed returns and the terms on which coal customers use the network, so it is among the most important external variables for the stock. Network also plans a flood-related review event claim in the first quarter of FY2027 for about $4.5 million of repair costs at Moura, which is small in scale but indicates the weather exposure of the rail corridor.

Sector and competitive position

Aurizon combines regulated network infrastructure with competitive haulage and freight businesses, so investors often assess it on regulated returns, contract tenor and dividends as well as volumes.

The company's strategic direction, as reflected in its results, is to diversify away from coal through bulk and containerised freight while maintaining coal contracts. The progress is visible in Bulk but incomplete in containerised freight.

Risks and developments to monitor

Principal risks include coal Demand and contract renewals, the QCA's final UT5 decision, weather events, cost Inflation and the pace at which containerised freight reaches break-even. Leverage near 3.0 times EBITDA leaves less Margin for error if earnings fall short of guidance.

Upcoming items are the QCA final decision on the UT5 extension, the first-quarter FY2027 flood claim, progress in containerised freight and the next set of contract renewals. Investors should compare FY2027 half-year results against the stated EBITDA range, and watch how management describes the Coal moderation as contracts roll over.