Rail boosts K&S profit, but fuel bites

K&S Corporation admits it has struggled to keep up with ever-escalating fuel price increases

By Jason Whittaker

K&S Corporation admits it has struggled to keep up with ever-escalating fuel price increases, failing to recover its fuel costs some months.

But the national logistics operator still booked a 15 percent boost in profit to $19.7 million for the full-year ended June 30, celebrating improved profitability through more efficient rail forwarding.

The Mount Gambier-based group’s operating revenues climbed 11.5 percent to $466.1 million for the year.

The company says the most pleasing thing about the result was an overall improvement in profitability.

"This was largely driven by the increased productivity achieved by the rail forwarding business as a result of the increased infrastructure expenditure by government," a statement from the company explains.

But fuel costs have had a negative impact on performance in both May and June, K&S reports, with additional costs not fully recoverable until July and August.

"The escalating cost of fuel can be expected to flow through to the ultimate consumer therefore impacting the strength of the broader economy," the company says.

K&S says it has found synergies through the acquisition last October of DTM Transport, with savings exceeding $2 million.

"We have now positioned the DTM brand for growth," K&S says.

The company also expects synergies from its January purchase of Western Australian timber carrier Brookes Transport.

"Our strategy has been, and continues to be, to grow the business through carefully targeted acquisitions, organic growth and competitively winning new tenders that deliver benefits to shareholders," the statement says.

While the sectors in which K&S operates continue to perform well, the company warns of "uncertain times ahead".

"We will continue to be innovative in taking the company forward while mindful of risks, particularly given the state of the credit markets and the general economic outlook," it says.

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