Toll juggernaut continues with $237m six-month profit

By: Jason Whittaker

The Toll Holdings juggernaut continues unabated as the logistics group books big profits and targets new opportunities across the Asian

The Toll Holdings juggernaut continues unabated as the logistics group books big profits and targets new opportunities across the Asian region.

The company has made an after-tax profit of $237 million for the six-months to December, a "very pleased" Managing Director Paul Little announced in Melbourne today.

"We have continued to grow revenues and earnings organically, as well as make significant acquisitions and integrate new businesses," he says.

The company booked revenue of $4.1 billion in the six-month period, an increase of 8.3 percent over the corresponding period.

Little was talking up Toll's capabilities as a regional freight forwarder, with the establishment of Toll Global Forwarding to bring the group's logistics networks together and the recently completed acquisition of Hong Kong-based forwarder BALtrans.

The company has also hinted at offloading airline Virgin Blue, which it says is not a value prospect for shareholders. Little says the company will announce the results of its review in the next few weeks.

Little says the company has controlled costs, including the recent fuel spike, well. He says domestic growth should continue on the back of a strong economy.

Toll's share price has put on almost 8 percent since the results announcement, after strong falls in recent weeks.

The period saw Toll expand its air cargo operations through the joint-venture with DNATA and a deal with Virgin Blue to use its belly space. The company also acquired contractor Victorian Express and integrated it with its Toll IPEC operation.

Toll says its underlying revenue for Australian operations grew by 7.3 percent to $2.3 billion for the period while EBIT grew 18 percent to $184 million. The EBIT margin of 8 percent is a record for the Australian operations.

Little says the Australian business has been driven by the resources sector, particularly in Queensland and Western Australia, and a "buoyant" retail market. But flooding in Queensland has impacted subsidiary QRX in the last few months.

New terminal facilities have added additional capacity to the operations, Little says, and a number of new sites are in a planning or construction process.

The company has also worked to consolidate Patrick's warehousing and distribution operations following the sale of the stevedoring business to offshoot Asciano.

Little says Toll's New Zealand operations, which the company now wholly owns after a buy-back last year, improved its performance despite "flat" economic conditions across the Tasman.

Revenue for the six months was NZ$383 million compared to NZ$379 million in the prior period, while EBIT grew from $20.6 million to $23 million.

The company is achieving greater levels of integration following the de-listing, and ongoing cost reduction is underway.

Toll is also continuing to work with the New Zealand Government on a rail track access regime and infrastructure development program to shift more of its freight onto rail.

Little says the acquisition of BALtrans is a major step forward in developing the company's global freight forwarding presence. The company also completed the acquisition of Sembawang Kimtrans last year.

"When combined with the Toll Global Forwarding operations we will have a very compelling service offering, both in-country and cross-border from Asia," he says.

Toll Asia's revenue was $292 million in the six-month period, up from $232 million, while EBIT (including share of profit from associates) was $36.7 million compared to $37.4 million previously.

"The increase in revenue is a direct result of higher investment in the marketing and business development resources of the business, as well as growing awareness of the Toll business model and capabilities throughout the region," Little says.

Little says Toll Global Forwarding will utilise Toll's in-country capacity and capability. An in-house supply chain consulting and design group, Toll Solutions, will drive technology developments on projects, he says.

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