This report does not constitute a rating action. MELBOURNE (S&P Global Ratings) Feb. 17, 2025--Aurizon Group's progress in improving its level of funds from operations (FFO) to debt is faltering under earnings pressure. Primary culprits are capital returns at Aurizon Network Pty Ltd. (AUN; BBB+/Stable/A-2) and weaker operating conditions mainly at Aurizon Operations Ltd. (AUO; BBB+/Stable/A-2). Aurizon Group's balance sheet will need prudent management as operating conditions worsen. Lower-than-expected capital expenditure aimed at growth, planned cost savings, and broadly stable debt should help offset the difficulties. We anticipate Aurizon Group's ratio of FFO to debt will be about 23% in fiscal 2025 (ending June 30, 2025). AUN's FFO to debt will weaken to about 16% in fiscal 2025, due to
