K&S Corporation Will Receive $25.0 Million Compensation From Aurizon

  • Nov 13, 2018 AEDT
  • Team Kalkine
K&S Corporation Will Receive $25.0 Million Compensation From Aurizon

K&S Corporation Limited (ASX: KSC) today announced that it has settled claims with Aurizon at $25.0 million compensation arising out of the Aurizon’s exit from its intermodal rail business in December 2017.

In 2016, Aurizon entered into five-year term contract with K&S Corporation for its intermodal rail business. Under the terms of contract, Aurizon had to transport approximately 20,000 twenty-foot Equivalent Units (TEUs) per annum across Australia. But in August 2017, just after the completion of one year, Aurizon announced its plan to exit from interstate intermodal business. 

Today, K&S Corporation announced the final settlement of compensation that Aurizon has agreed to pay without admission of liability. The amount that Aurizon will pay is $25.0 million. However, the majority of this amount, i.e. $16.1 million, was recognized as receivables in the statutory results for the year ended 30 June 2018.

As per the FY18 statutory results announced by the company on 23 August 2018, a statutory profit before tax of the company was $24.6 million, showing a tremendous improvement of 161.7% on the previous corresponding period. But this massive growth in statutory profit reflects one-off benefits from Aurizon’s compensation, proceeds from sale of Arrium among others, as underlying profit before tax was $11.0 million in FY18, just slightly up by 1.8% on Fiscal 2017.

Operating revenues increased by 13.2% to $854.6 million for the year ended 30 June 2018. Whereas, the bottom line of the company has recorded an underlying profit after tax of $7.7 million, an increase on the previous corresponding period of 2.0%. During this time, the company witnessed a steady improvement in its DTM and New Zealand business, but its chemical transport division Chemtrans has delivered lower returns due to significant decline in market demand.

For Financial Year 2018, the Board of Directors of K&S Corporation declared a final dividend of 2.0 cents per share, fully franked. It was in addition to the interim dividend of 2.0 cents per share, thereby making a full year total dividend of 4.0 cents for FY18.

Looking into Fiscal year 2019, the company stated that it will continue to focus on organic growth, specifically in market segments that have the potential to deliver strong returns on investments. However, the company did not provide any earnings guidance for FY19.

In today’s trading session, KSC share price edged up by 2.405% to close at $1.490 on 13 November 2018. Whereas, PE multiple was 10.470 x with market capitalization of $183.16 million. Looking to the historical performance of KSC, we have observed that the stock has fallen by 19.17% over the past one year.


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