There was plenty to like about Asciano's (ASX: AIO) full year financial results released to the market this week. As Australia's largest national rail freight and port operator, Asciano is heavily exposed to the underlying economic activity of the nation. Given the headwinds the domestic economy has faced in financial year (FY) 2013 this makes the double-digit growth rates achieved all the more impressive.
A 10.6% boost in underlying revenue to $3.7 billion and a 39.2% increase in underlying net profit after tax to $348.1 million was primarily thanks to solid performances from two divisions.
The Pacific National Coal haulage division saw coal volumes increase 15.5% and revenues increase 18.9% to $842 million (net of access fees). This revenue growth combined with a significant reduction in capital expenditure helped push operating earnings before interest and tax (EBIT) up 19.3% to $287.9 million.
The Bulk and Automotive Port Services division also contributed to overall group growth. Vehicle movements and vehicle storage were both up strongly, which helped boost underlying revenue by 38.1% to $680 million and underlying EBIT by 34.6% to $89 million.
The board has declared a final dividend of 6.25 cents per share (cps), which when added to the interim dividend of 5.25 cps provided shareholders with a full year dividend of 11.5 cps – up 53% year on year and places the stock on a dividend yield at 2%.
Foolish takeaway
Management's guidance is for the contribution from new contracts and current customer commitments to help Asciano post higher earnings in financial year 2014, although the growth rate is not expected to be as strong as 2013.
Given full year 2013 earnings per share were 34.8 cps, at Asciano's current share price of $5.56 the company is trading on a historic price-to-earnings ratio of 16 times. As highlighted here, in reference to Asciano's major competitor Aurizon (ASX: AZJ), given the monopoly-type earnings Asciano enjoys on parts of its asset base, this valuation does not appear demanding.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
