Rail and ports giant Asciano expects to hold its own despite tough market conditions, underlining its worth amid a long running takeover battle.
The company's half year profit rose five per cent to $199.8 million on the back of strong coal haulage volumes, in a solid result that will delight its suitors.
"This is a pretty credible result in a tough operating environment. We expect more of the same in the second half," managing director John Mullen said.
He reiterated the company's guidance for flat to low single-digit growth in earnings for the full year.
Asciano handles nearly half of all container traffic entering or leaving Australia through its Patrick ports-related businesses, and also owns the Pacific National rail freight business.
The group has been the target of a $9.05 billion takeover from rival consortiums led by local logistics firm Qube Holdings and Canadian infrastructure giant Brookfield.
It said this week that the rival bidders are considering making a joint, all-cash proposal in an effort to seal the drawn out battle.
On Wednesday, Asciano said its profit was largely driven by cost cuts and better haulage volumes.
It recorded cost savings of nearly $40 million due to its ongoing business restructuring. It also achieved a 12 per cent increase in coal haulage volumes in Queensland, and a three per cent increase in NSW.
However, this was offset by weaker volumes in the intermodal and bulk ports businesses because of the ongoing weakness in the Western Australia economy and the resources sector, which contributed to an overall decline in revenue.
"I don't think it will get worse, with a lot of closures done already. I hope we have reached some sort of a steady state," Mr Mullen said.
Underlying earnings before interest and tax fell three per cent to $391.1 million, but the company said this was largely due to depreciation from the increased capital investments in recent years.
Asciano expects revenue to be impacted by the soft market conditions in some parts of the business, and said cost cutting will mainly drive earnings growth for the full year.
The company has cut its capital expenditure target for the full year to $350 million, down from the $390 million to $440 million range expected earlier.
Asciano shares closed steady at $9.01 each.
ASCIANO TIGHTENS BELT AND LIFTS PROFIT
* Net profit up 5.3pct to $199.8m
* Revenue down 4.3pct to $1.86b
* Interim dividend up 4.75 cents to 13 cents
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