Australia’s Toll Group has increased half-year profits thanks to better express and logisticsresults but is remaining cautious about the outlook for the second half of its 2010/11 business
year.Its Australian express businesses performed better in the six months ending December 31, 2010,and Japanese subsidiary Footwear Express is on the road to better results, the company said. Theglobal forwarding business continued to expand and also improved its results.
Toll’s H1 revenues went up by 28% to A$4.24 billion, driven mostly by acquisitions. The groupachieved organic revenue growth of 7% despite soft trading conditions in key markets and the impactof severe weather conditions. EBIT, excluding non-recurring items, improved by 20% to A$254million. Net profit (before non-recurring items) was 18% higher at A$173 million while net profitwent up 59% to A$175 million.
Managing director Paul Little said: “We have delivered growth both organically and throughacquisitions in a period of economic and environmental challenges. Our Australian businessesdemonstrated again why they are leaders in their segments with strong results in a difficultmarket. The Australian FMCG and industrial segments remain impacted by the global downturn andreduced consumer confidence, while some businesses had earnings affected by natural disasters.
The Toll Global Express division, covering the express businesses in Australia, Japan andelsewhere, increased its revenues by 39% to A$1.1 billion, with Japan’s Footwear Expressfully-consolidated for the first time. EBITA was 33% higher at A$95 million, which was a slightlylower 8.4% operating margin. Revenue and margins excluding Footwork Express improved over the priorcorresponding period, reflecting improved volumes across all Australian businesses and theoperating leverage that exists in these businesses, Toll Group said.
In Australia, Toll Priority saw volume increases across all states driven by strength in thebanking and government sectors and online ordering whilst the Toll Air Express business benefittedfrom a higher level of charter work. The successful integration of the DPEX business in Singapore,Hong Kong and China following its acquisition in June 2010 was a primary focus in the first half.Two other small, strategic acquisitions, North Queensland Couriers and Magpie Couriers, werecompleted.
Toll IPEC experienced volume growth in all states, particularly in Western Australia which wasdriven by the mining sector. The new Toll IPEC depot at Hazelmere in Western Australia became fullyoperational in December and all Toll IPEC operations in Perth will be fully transitioned to the newsite by the end of March 2011. Toll Fast saw revenue increase year on year with strong volumes fromcontract services customers only partially offset by softer volumes from the ad-hoc customer base.Significant contract wins for the division included Ingram Micro and Coles Supermarkets HomeDeliveries.
Japanese business Footwork Express had EBITA of A$16.5 million, including one-off effects, onrevenues of A$385 million. Its underlying EBITA was close to breakeven. With soft economicconditions in Japan, the company continued to focus on operational improvements. “When we look atFootwork Express, management continues to believe that the Japanese market is ripe for a strong andefficient road express provider and remains excited about the business’ potential in the medium tolong term. Our immediate focus is on staff training, operational efficiency and new businesspractices,” Little said.
Toll Global Forwarding more than doubled H1 revenues to A$901 million thanks to variousacquisitions and organic growth. EBITA was 232% higher at A$24.6 million, and the operating margindoubled to 2.4%. Airfreight volumes grew by around 40% to over 75,000 tonnes for the six months toDecember 2010, and ocean freight volumes increased 150% to around 260,000 TEU. “After another yearof growth, Toll’s Global Forwarding division is now just outside the world’s top ten generatingrevenue for the half of $901 million. As we predicted, it is achieving improved margins with bothair and sea volumes growing strongly over this period,” Little said.
Looking ahead, Toll said it expects that the two-speed Australian economy evident over recentperiods will continue to be a feature, and will continue to influence the relative performance ofthe domestic businesses. The outlook for the retail environment over the next six months is farfrom clear, and conditions are expected to remain challenging in the near term for Toll businessesexposed to the retail and auto sectors. Other sectors of the non-resource economy appear to befairly stable, although cost pressures relating to energy and labour costs are potential risks.
