Various costs fail to hold back 16 per cent rise at the bottom line
K&S Corporation recorded a welcome increase in net profits for the first half of the financial year.
The freight company’s 16.1 per cent rise to $6.55 million would have been higher but for reorganisational costs of $500,000 and fraud-related costs of $1.9 million.
Operating cash flow was subject to a 335 per cent boost over the previous first half to $24.9 million while revenues were up 39 per cent to $360 million.
“The result was driven by a solid performance from Scott Corporation and K&S’s traditional business,” the company says.
New bulk haul subsidiary Scott Corporation, bought 16 months ago, was now “bedded down” and synergies gained in equipment, property and back office functions.
“Across our whole business, we have also continued to focus on reducing our operating costs primarily in the areas of people, services and equipment,” the company says.
Despite that, for this period at least, many costs and expenses were up compared with the previous first half.
Fleet expenses rose from $48.5 million to $77.7 million, contractor expenses from $67.1 million to $94.1 million and employee expenses from $83.4 million to $109.7 million, though total liabilities were down from $253 million to $238 million.
K&S says synergies are now being realised following its Scott Corporation but noted its Western Australian business was exposed to end of the mining boom.
“With declining commodity prices, miners have continued to reduce both project and operational expenditure,” it says.
As is its practice, K&S offers no full-year earnings guidance.