Transport arm holds line but WA firm sees profits and revenues down in difficult times
Western Australia’s economic woes are being reflected in tough market conditions for CTI Logistics.
The state’s listed transport and logistics operator’s first half net profit fell 36.8 per cent from $6.7 million to $4.2 million on revenues that fell 11.7 per cent from $73.8 million to $65.2 million.
Hampering its performance were a general business activity deceleration, the expected downturn resources and minerals project work in the state and weaker warehousing than expected over Christmas.
Despite the blow, the company sees silver linings in parcels growth, road freight margins and the $19.6 million purchase of 67,000 sq m of land adjoining its new Hazelmere warehouse and distribution centre, raising its total there to 154,000 sq m.
“It is recognised that this purchase, which was funded with a combination of debt and cash, will have a shorter term impact on profitability,” executive chairman David Watson has told shareholders.
“However, we are confident that the increased size and prime location of the property at Hazelmere will provide excellent future growth opportunities.”
The transport arm saw revenues fall by less than $1 million to $40.3 million while pre-tax profits actually rose from $2.8 million to $3.3 million.
This all is enough to keep the famously bullish firm confident about future growth.
Notwithstanding a very competitive environment, we continue to identify opportunities for organic development, and are also conducting due diligence on several bolt-on acquisitions as we position the company for longer term growth in revenue and profit,” Watson says.
CTI expects to continue reducing costs, such as motor vehicle and transportation, which was down from $7.1 million to $6.6 million, and subcontractor expenses from $19.5 million to $18.4 million, and employee benefits from $25 million to $22.3 million.
The main pain was felt in the logistics business, which saw revenues down from $26.1 million to $19 million and before-tax profits down from $3.8 million to $986,000.