GMK purchase, expansion and a return of business projected to lift profits
With the Western Australian economy and the resources sector no longer the wind beneath its wings, CTI Logistics is having a hard time replicating earlier performances.
Net annual profits have come in at $5.9 million compared with last year’s $9.8 million but the company is looking to the future for a reversal.
“The planned improvement in the regional road freight margins in transport has been tempered somewhat by lower throughput in demand from out warehousing client base earlier in the year,” executive chairman David Watson says in a letter to shareholders.
“Despite a general slowdown in market activity, customer volumes for third party logistics on 2015-16 are expected to return to more normal levels.”
Operating cash flow improved to $13.1 million from $11.6 million.
Less business meant lower expenditure, with motor vehicle and transport costs down to $13.3 from $14 million and subcontractor expense down to $34.6 million from $37.5 million.
Both major income streams were down with ‘transport’ $81 million from $87.5 million the previous year and ‘logistics’ $39 million from $49 million.
The result would have been somewhat worse but for the June acquisition of flooring transporter acquired Logico Operations Group Limited and its subsidiary GM Kane & Sons (GMK).
GMK contributed revenue of $3.45 million and profits after tax of $273,823 to the group’s results.
CTI hasn’t been afraid to use debt to fund investment.
Interest bearing debt rose $29.5 million following the purchase of GMK, additional land adjacent to the Hazelmere facility, a Karratha property and the cost of plant, equipment and motor vehicles.
For the year ahead, CTI pledges to grow.
It will look to integrate GMK and expand its operations nationally, expand the warehousing footprint in South Australia in support of client demand, expand the metropolitan transport network and continue to explore further opportunities for the acquisition of businesses in fields related to or compatible with the group’s existing core operations.