Aurizon shares have slumped more than 10 per cent after the company lowered its half year earnings guidance and outlined an up to $240 million writedown.
Australia's largest rail freight operator says challenging market conditions will result in its first half coal haulage volumes being three to four per cent lower than previously forecast.
It now expects volumes between 202 million tonnes and 212 million tonnes in the first six months of the financial year, and said there is a higher level of uncertainty over second half volumes.
Its underlying earnings before interest and tax (EBIT) guidance for the first half will be hit as a result and are now expected in the range of $390 million and $410 million.
The company reported underlying profit of $308 million in the first half of the 2014/15 financial year.
"Whilst it is disappointing our earnings for the first half of FY16 will be below the prior year's result, the reasons are essentially one-off," Managing Director Lance Hockridge said in a statement on Wednesday.
By 1224 AEDT, Aurizon shares had dropped 66 cents or 13.4 per cent, at $4.28.
They closed 58 cents, or 11.74 per cent, lower at $4.36.
Guidance for its iron ore and freight volumes remains unchanged.
Aurizon will also take a non-cash impairment charge of between $215 million and $240 million in its half year results, relating to assets acquired under the Aquila Resources takeover, delays in a planned rail network in Queensland's Galilee Basin, and surplus rolling stock.
Aurizon has also stopped work at the $6 billion West Pilbara Iron Ore project, which it is developing along with China's Baosteel and South Korea's POSCO.
The project's future has turned uncertain following the slump in iron ore prices.
Aurizon said the project partners will review the situation at the end of the March quarter, but added it is now considering whether to take writedowns related to stoppage of work on the project.
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