Australian express and logistics group Toll today posted much-improved second-half results,despite ongoing challenging conditions in the Australian economy, and generated higher profits for
the year ending June 30, 2010.Improved second-half trading resulted in a 7% increase in full-year revenue to $6.9 billion, anda 3% rise in net profit after tax to $279 million, although excluding non-recurring items this wasslightly down on the previous year. The group said the revenue gains were the result of bothacquisitions and contract wins, partly offset by the impact of the stronger Australian dollar.
The news contrasts with weak first-half results published in February that caused the group’sshare price to drop 18%. Today’s share price opened at A$6 and initially spiked 4%, before closingat $5.99.
Toll Group Managing Director Paul Little claimed the result demonstrated the effectiveness ofcost-control measures, and operational excellence. “A highlight was an excellent result from GlobalLogistics, which achieved improved margins under difficult circumstances,” he said. “GlobalForwarding continued to successfully roll-out its acquisition growth strategy and improved marginsin the second half, providing solid momentum for fiscal 2011. Other standout operations includedGlobal Express maintaining their market leadership position.”
Little was positive about the outlook for this year. “Whilst Australian businesses werechallenged by reduced volumes, economic conditions are expected to show modest uplift in volumesduring the current year,” he said.
Cost savings and efficiency measures meant Toll was “well positioned to benefit from anticipatedimprovement in economic activity, particularly in the retail sector,” he added. “Operationalchanges at Footwork Express in Japan are gaining traction, and we would expect to see improvingmargins from this business in the coming year.”
A restructure earlier in the year meant the group reported separate full-year results for itsToll Global Express division for the first time, including its Toll Priority and Toll IPECbusinesses. Revenue of $1.790 billion for the division was 38% higher than the previous year,primarily due to the acquisition in October 2009 of Footwork Express (FWE). Excluding FWE, revenuedeclined $21 million, or 1.6% over the prior year, to $1.28 billion. EBIT (excluding FWE) was$126.0 million compared to $137.7 million last year, while EBIT for FWE was $7.8 million.
“This was a strong result, given the tight conditions in the marketplace,” Toll said. “Inparticular, the EBIT result reflects the strict controls on variable costs across the division.”& amp; amp; amp; amp; amp; amp; lt; /p>
Highlights at Toll Global Express over the year included the acquisition of Australian ArmouredExpress, to compete in the logistics market transferring cash and valuables; the acquisition of theDPEX Group, headquartered in Singapore, to expand the division’s network in Asia; and moving tofull ownership of Footwork Express. “This acquisition positions Toll Global Express as a leadingplayer in the Japanese express freight market,” the company claimed.
The express division also achieved significant contract wins with Gordon & Gotch, Komatsu,Officeworks, Malaysian Airlines, Optus, Sussan Group and Westpac/St George. It completed thesuccessful first-stage implementation of a new freight management system for Toll Priority and TollIPEC, which it said would provide operating efficiencies and improved service levels to customersin the future.
“Revenue and margins within Toll Priority were maintained at prior year levels throughsuccessful conversion of the business development pipeline and continued tight cost control,” thecompany said. Toll IPEC was the business unit most affected by difficult trading conditions,particularly in the retail sector, it added.
The most successful division, Toll Global Forwarding, achieved a revenue increase of 15% to$1.07 billion, boosted by the acquisition of UK forwarders WT Sea & Air and Genesis, while EBITfor the period grew 12% to $20.3 million.
Toll Global Logistics saw revenues decline 6% to $1.26 billion. EBIT for the period was $101.1million compared to $90.9 million for the prior period. Highlights included the integration ofST-Anda into Global Logistics in China since purchasing the remaining minority stake in thebusiness earlier in the year.
The Specialised and Domestic Freight unit also saw a 6% decline in revenue to $1.05 billion,while EBIT for the period was $65.3 million compared to $88.9 million for the prior period.
Little claimed new contracts across the group were expected to generate more than $400 millionin additional annualised revenue for the group. Recent significant contract wins include: Sears(US), Target (US), Defence Relocations (Australia), Cadbury (Australia), Proctor and Gamble (Asia)and Weatherford (Asia).
“We have retained our very sound balance sheet following recent acquisitions,” he said. “AcrossToll, our ongoing investments in technology and fleet, together with new contract opportunities,position us well to deliver a strong operating result in fiscal 2011.”
