Riding on Pacific National’s Coal division results, Asciano reports an 8.8 percent revenue increase to $1.6 billion and a net profit of $123.5 million
By Anna Game-Lopata | February 23, 2011
Riding high on Pacific National’s Coal division results, Asciano today reported an 8.8 percent increase in revenue to $1.6 billion and a net profit of $123.5 million
“The coal division’s solid result of $83.9 million is an improvement of 41.5 percent,” says the company’s new Chief Executive Officer John Mullen.
“It reflects the healthy growth of our Queensland
business combined with the ongoing strong performance from our NSW business.”
“The continued push into the Queensland coal haulage market has been extremely successful to date with a total of 49 million tonnes to be hauled annually from 2012.
“The focus continues to be on growing the business and investing in capital that delivers benchmark returns,” Mullen says.
Asciano says the tonnages of coal it hauled increased significantly despite the impact of severe weather conditions in Queensland and NSW at the end of the year.
“In addition, the Hunter Valley network experienced significant congestion, which increased cycle times compared to the same period last year,” Mullen says.
“This congestion combined with lower than expected long haul coal available for haulage led to some margin erosion in the NSW business.
“Nevertheless, the Coal business continues to be the main driver of earnings growth for the Group,” he says.
Overall, the rail and port operator’s earnings grew to $270.9 million from $230.8 million in the 2010 half year.
“The Group earnings uplift is a result of significant improvements across three of the four divisions,” Mullen says
“Coal, as previously mentioned increased its earnings by 41.5 percent, while Container Ports increased by 16.7 percent and AB&G by 41.2 percent,” Mullen says.
“Earnings for the Intermodal business fell by 14.4 percent.”
PATRICK CLINGS TO GROWTH
Patrick Container Ports achieved earnings of $79.8 million despite a reduction in total container lifts of 2.9 percent.
“The total Australian container port trade grew by 8 percent, but Patrick volumes were impacted in the first half by the loss of the OVSA customer contract in the prior year,” Mullen says.
“Additional impacts include changes to shipping consortia and an overall softness in volumes in Q2.
“Excluding the loss of OVSA, the remaining customer base grew by 3 percent over the period.”
Patrick lifts at the four ports across Australia were mixed with growth in Melbourne and Fremantle.
“Improving customer service has been a core focus for the Division,” Mullen says.
“Comparing the previous six month period to 30 June 2010, customer service levels improved and landside metrics exceeded industry benchmarks with truck turn around times averaging approximately 36 minutes across all ports.
“The Brisbane Autostrad Terminal also exceeded performance targets for the period,” he says.
PORT LOGISTICS
Mullen says the Group’s Port Logistics business performance improved significantly at both the EBIT and EBIT margin level following the restructure and rationalisation of services.
“The transformation of the Port Logistics business will continue into the second half,” Mullen says.
“The Six Sigma program being implemented across the Container Ports division is aligned with improving levels of customer service, satisfaction and the enhancement of operational efficiency.”
EBIT margins for the period increased by 370 bps to 21.9 percent.
RESTRUCTURE BOOSTS AB&G
The recently restructured Auto Bulk and General (AB&G) business benefited from improved grain exports in the Bulk Rail business and strength in some commodities moved through the Bulk Ports business.
It recorded earnings of $40.1 million up from $28.4 million last year.
In the 2011 Half Year, AB&G operated four businesses: Autocare; Bulk Ports; General Stevedoring; and Bulk Rail.
Since January 2011, AB&G has been restructured with the businesses reallocated to the Intermodal and Container Ports businesses.
“The Autocare business benefited from strong motor vehicle sales and the launch of new vehicles during the period,” John Mullen says.
“These benefits were somewhat offset by weakness in bulk volumes stevedored in Western Australia and commodities handled through the Ports of Albany and Westernport.
Asciano says the 41.2 percent improvement for the division is a result of strong growth in the Bulk Rail, Bulk Ports and Autocare businesses.
“A 17.1 percent decline in EBIT for the General Stevedoring business marginally offset this growth,” Mullen says.
“The management of the AB&G division continues to focus on cost savings and improving asset utilisation.”
CUSTOMER LOSS HITS INTERMODAL
The only of Asciano’s businesses to fall, Mullen
blames the Pacific National Intermodal division’s 14.4 percent earnings decline on the impact of continued softness in consumer spending and the loss of its freight forwarding customer Austrans.
“The division disposed of its Tasmanian operations in November 2009,
so adjusting for this, there was
a decrease in volumes of 2 percent,” Mullen says.
“Revenue did increase by 5.2 percent but EBIT declined by 3.8 percent
on the previous corresponding period.”
SuperFreighter volumes declined in the period while volumes in the premium service “Express” offering improved significantly over the six months.
“Steel volumes improved marginally despite the impact of the high Australian dollar and of the construction slowdown in the steel market,” Mullen says.
“Earnings were also impacted by a number of rail incidents including a major derailment in Northern Victoria.
“The Intermodal division will continue to focus on its business improvement initiatives associated with asset management, fuel, labour, operations and planning,” Mullen says.