Toll profit takes hit from Virgin Blue and NZ sales

Toll posts one-off loss of $952 million as a result of Virgin Blue and NZ rail and ferry operations

By Brad Gardner

Toll’s decision to offload Virgin Blue and its New Zealand rail and ferry operations has bitten into its profit margins, with the announcement of an annual net loss of $694 million.

The sale of both operations cost the logistics giant $952 million, impacting on its full year after tax earnings of $258 million.

Managing Director Paul Little says it has been a significant year for Toll following its decision to sell its New Zealand rail and ferry operations and Virgin Blue.

Toll listed the airline carrier as a discontinued operation from June 30 following its decision to distribute Virgin Blue shares to shareholders via in specie dividend.

Despite its one-off loss, Little says Toll is on track to deliver high economic returns, demonstrated by significant revenue growth across all areas of its business.

Toll’s revenue grew from $4.9 billion to $5.6 billion the past year while organic growth in Australia grew 7.5 percent and 12.5 percent in Asia.

Furthermore, Tool’s decision to divest itself of Virgin Blue and its New Zealand operations slashed its net debt from $1.27 billion to $650 million.

Little predicts strong earnings and greater cash flow based on current economic conditions, but says the company is well placed to deal with adverse economic conditions such as high interest rates, fuel prices and currency volatility.

"Based on current trading conditions, the outlook for the full year is for strong earnings and cash flow generation to continue across the business," Little says.

"We are pleased with the performance of our core operations, the integration of several new acquisitions and our balance sheet strength, which will all support our ongoing strategic development."

The company has made a number of key acquisitions the past year, purchasing Victorian Express, Couriers Australia and SkyNet.

Little also highlighted the establishment of a joint venture with Dnata and new contract wins in the retail, mining and automotive sectors.

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