Australia’s leading express and transport group, Toll Holdings, today unveiled a 76 per cent slumpin full-year profits due to write-downs on loss-making Japanese business Footwork Express and other
assets that outweighed stable results for its domestic express operations.The company confirmed it is still reviewing the future of the Japanese express company thatit acquired in 2010.
In the year ending June 30, 2012, Toll Group increased revenues by 6 per cent to A$8.7billion (€7.2bn) but operating profits (EBIT) dropped 6 per cent to $411 million (€341m). Netprofits before non-recurring items were down 6 per cent at $274 million while reported net profitsdropped 76 per cent to $70.9 million, largely due to $203 million of writedowns for Footwork andvarious assets in Australia.
Toll Group Managing Director Brian Kruger said he was pleased with overall performance givendifficult market conditions. “An increased focus on returns across our six divisions, and ourstrong financial position mean Toll is well placed to continue to pursue opportunities forsustainable growth,” he said.
The largest division, Toll Global Express increased revenues by 4 per cent to $2.23 billionbut its operating profits dropped 23 per cent to $131 million from $170 million last year due tothe results in Japan.
In Australia, the express business increased revenues 7 per cent to $1.5 billion but profitsdropped to $137 million from $147 million last year. “Toll Global Express continued to deliverstrong returns from its Australian businesses despite soft markets in some areas, and also launchedits new B2C parcel delivery service to help capitalise on the growing ‘e-tail’ purchases market,”Kruger said.
Toll reported the domestic express businesses saw “subdued” trading in New South Wales andVictoria but “solid” revenue growth in Western Australia and Queensland. EBITA performance in thedomestic operations was lower due to the challenge in passing through cost increases in the currentmarket conditions, start-up costs associated with revenue initiatives and increased depreciationassociated with recent IT investments, it added.
Toll IPEC increased revenue in all significant regions of operation, driven by expansion intonon-traditional markets with customer wins in the Resources, IT and Agriculture sectors, the groupstated.
Toll Priority had flat revenue as revenue wins in some areas compensated lower volumes fromsome existing customers. Its aviation business Toll Air Express recorded earnings improvement fromstrong air freight and charter revenue and an increase in Aviation Engineering work throughsecuring a number of large tenders.
The courier service Toll Fast recorded revenue growth from large contracted servicecustomers, and magazine and news distribution services.
During the second half of the financial year, Toll launched its B2C offering in the marketand won a number of traditional and online retailers as cornerstone customers. Toll said it expectsto increase market share in this expanding segment through the compelling offering of its deliverynetwork, and innovative solutions for customers and consumers.
In Japan, Footwork Express revenues declined slightly to $724 million and the businessslumped into the red with a $5.4 million loss profit compared to last year’s $22.9 million profit.
Economic conditions in Japan continued to prove challenging, the group explained. After asmall increase post- Earthquake/Tsunami, Toll Express Japan has not seen activity levels improve,with industrial production and consumer spending levels remaining subdued. A full strategic reviewof the business has commenced, Toll stated.
Among other divisions, Toll Global Resources’ profits rose 16 per cent to $103 million onturnover of $1.1 billion, Global Logistics improved profits slightly to $93 million on turnover of$1.4 billion but Global Forwarding profits dropped 39 per cent to $20 million on lower turnover of$1.45 billion.
Looking ahead, Mr Kruger said Toll’s strong balance sheet means Toll remains well placed tocontinue to pursue opportunities for organic growth. “While we don’t expect any short termimprovement in external conditions, recent new contract wins combined with our ongoing investmentin fleet, property and IT will help us support future earnings growth,” he said.
