MELBOURNE, Aug 15 (Reuters) - Aurizon Holdings AZJ.AX reported a 16 percent drop in annual underlying profit on a decrease in transported coal and said on Monday it expects operating earnings to grow in 2017 but less than analysts had been forecasting.
"It was a challenging year for the company and our customers ... however, we've seen a stabilisation in coal volumes in the second half, with relatively resilient earnings for the year in a lower volume environment," Aurizon Chief Executive Lance Hockridge said in a statement.
Profit before one-offs fell to A$510 million for the year to June 2016 from A$604 million a year earlier, which was slightly better than analysts' forecasts around A$498 million.
It paid a full-year dividend of 24.6 cents, up 3 percent on a year ago and a touch better than market forecasts.
Aurizon has been scrambling to cut costs as tonnages and revenue have been hit by a slump in the coal sector and said it is on track to achieve savings of A$380 million over the three years to June 2018.
It is bidding for Glencore Plc's GLEN.L Australian coal hauling business, GRail, in New South Wales, where rival Asciano's Pacific National is the biggest coal transporter, a deal that could cost around $1 billion. is hunting for growth after writing off its investment in the West Pilbara Iron Ore rail and port project, shelved last December due to a market glut. The write-off, booked in February, dragged annual net profit down 88 percent to A$72 million.
Aurizon said it expects underlying earnings before interest and tax to rise to between A$900 million and A$950 million in the year to June 2017 from A$871 million in 2016, based on coal volumes of 200-212 million tonnes.
That is well below analysts' forecasts for underlying EBIT around A$970 million for fiscal 2017.