Toll Group, the Asian region’s leading provider of integrated logistics, today released interim results for the six months ended 31 December 2011, with net profit after tax of A$158 million, down four per cent compared to the corresponding period, and sales revenue of A$4.4 billion, up five per cent. Total operating profit (EBIT) was A$248 million, down two per cent.

Summary Financials

A$ million 1H12 1H11 % change
Sales revenue 4,436.8 4,238.5 +4.7
EBITDA (excluding associates and JV’s) 379.8 361.0 +5.2
Total operating profit (EBIT)* 248.2 253.9 -2.2
Net profit after tax attributable to shareholders 157.9 163.9 -3.7
Cash flow from operations 204.1 254.4 -19.8
Earnings per share (pre PPA and non-recurring items) 24.3 25.5 -4.7
Interim dividend per share (fully franked) 11.5 11.5 nc

* EBIT includes profit from associates, but excludes non-recurring items. Prior period includes net one-off gain of approximately $18 million in Footwork Express

Mr Brian Kruger, Managing Director of Toll Group said “These results highlight Toll’s robust underlying business model. Once again, Toll’s diversity is proving to be its strength in these challenging economic times. Our exposure to the resources sector as well as the faster growing markets in Asia has helped offset the difficult conditions in discretionary retail and in the manufacturing sector in Australia.

“Despite the difficult conditions, our leading positions in many of our target markets have allowed us to continue to grow by winning business with existing and new customers.

“Our challenge going forward will be to focus on maximising returns from recent capital and acquisition expenditure and to take advantage of the many organic growth opportunities that we have in Australia and in our chosen overseas markets. Our One Toll initiative, which is already driving improved collaboration across the Group, as well as building brand recognition, will be a key driver for us in meeting that challenge.

Commenting on Divisional performances, Mr Kruger said, “Toll Global Resources has continued to see strong organic growth, within both the ongoing Gorgon project and also with our growing involvement in Queensland liquefied natural gas (LNG) projects. The Singapore Toll Offshore Petroleum Services (TOPS) supply base project has also progressed well and is due for completion in the first quarter of 2013. Our acquisition of Mitchell Corp (rebranded as Toll Mining Services, Western Australia) has performed very well and has already enhanced our opportunities for further growth in that region. The completion of a significant fuel distribution contract in Toll Remote Logistics has partly offset these benefits, while the sale of our interest in Shenzhen Chiwan has reduced Associate earnings.

“Toll Global Logistics saw growth in almost all businesses with the strongest performance from its Customised Solutions Services (formerly known as in2store and Toll Chemicals) reflecting increased volumes from both new and existing customers, while Automotive Logistics Services saw some improvement from both new Australian domestic models and increased import activities. The growth markets of China and India also showed gains as we continue to build our positions in those countries.

“Toll Global Forwarding found the macro conditions particularly challenging given its current stage of development. Our current over-reliance on fashion apparel during what has been a very weak period for that sector can clearly be seen in this result. Moving towards a more balanced market sector exposure and achieving scale remains critical for achieving our return targets for this business. Pleasingly we have made good progress on building a systems platform that should deliver productivity improvements over the next twelve months.

“The Australian businesses of Toll Global Express have continued to perform well, while underlying earnings at Footwork Express in Japan were adversely affected by a very weak market environment. The period on period comparison for overall reported EBIT is distorted by inclusion of net one-off gains in Footwork Express of around $18 million in the prior period. In Australia our targeted offering to online retailers has begun to gain traction.

“Revenue for Toll Domestic Forwarding was ahead of the prior corresponding period despite continuing weak underlying economic conditions. However, aggressive competition and lingering weather effects in Queensland led to margin pressure in some businesses. We did see an improved performance from our New Zealand business as cost improvement initiatives took hold and our Tasmanian shipping business improved volumes with surplus capacity being removed from that market.

“Toll Specialised and Domestic Freight performed well due to a combination of strong volumes to the resources sector and the implementation of cost improvement and yield management initiatives. In addition, the Toll Liquids business saw the benefit of new contract wins.

“Overall, the Group generated operating cash flow of $204.1 million, and invested $239.3 million in capital expenditure, including A$31 million on the TOPS redevelopment in Singapore, with the total spend now A$183 million. Our balance sheet remains strong with net debt to net debt plus equity at 29.7%. We continue to have sufficient balance sheet capacity for capital expenditure and targeted acquisitions.”

“An interim fully franked dividend of 11.5 cents per ordinary share will be paid to shareholders on 30 March 2012. The Board has also decided to suspend the Dividend Reinvestment Plan (DRP). As we believe we have sufficient liquidity available and overall a balance sheet that can fund organic growth and acquisitions, ultimately we believe it is in the best interests of our shareholders.

In conclusion, Mr Kruger said, “While the volatility we are all seeing in the macro environment makes it very difficult to have a firm view on the outlook for the remainder of the year, we are confident that Toll is following a strategic path that will provide superior, sustainable returns for our shareholders over the longer term.”

See full company announcement with financial tables (PDF)

 


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