Maxitrans records net profit, but trading conditions and sales still a cause for concern
By Rob McKay | August 23, 2010
Maxitrans Industries is back in the black after recording an annual net profit after tax (NPAT) of $5.8 million for the past financial year after a loss in the prior year of $1.9 million.
The company’s results showed a rise in NPAT despite a fall in revenue from last year to $235 million from $253 million.
But it was still the second lowest NPAT in the past five years, due in part to net restructuring costs of $800,000.
Maxitrans described the past financial year as one in two halves, where an early 24 percent rebound in orders following the economic downturn was followed by a stalled market and then a 7 percent fall in sales on the prior financial year.
“The stimulatory impact of the Federal Government’s incentives has now dissipated and activity has slowed in a number of sectors outside minerals and resources,” the company says.
“A distinct change in customer sentiment was noticed in April 2010 resulting in a reduction in order enquiry and order intake.”
Maxitrans says business confidence is down and customers have struggled to access credit, affecting demand for new equipment.
“A number of smaller transport operators have exited the market due to the difficult trading environment, resulting in a cyclical surplus in the amount of trailers on the second hand market; causing prices to be depressed,” it says.
Sales of vans, trailers and rigid bodies fell 4 percent during last financial year while order intake increased by 25 percent over the prior year with general trailers showing a strong improvement during the year.
Despite tight market conditions and aggressive pricing, Maxitrans says production efficiencies at its Ballarat facility in Victoria helped improve its margins over the previous year.
However, it says a reduction in freight volumes in certain sectors and a tight credit market will continue to make trading conditions difficult.
TIPPER SALES FALL
Tipper unit sales fell 10 percent compared with the prior year though order intake grew 9 percent as a result of a large unnamed contract.
“The tipper market remains depressed; particularly in ‘truck and dog’ products utilised in the sand/gravel/construction sector,” the company says.
“The rural market performed well for most of the year but was impacted by lower grain prices driven by the appreciation of the Australian dollar.”
But Maxitrans fears that the locust plague in the grain areas of NSW and Victoria may also threaten demand.
“Tipper customer sentiment continues to be negative,” the company says.
“A large number of second hand units are being auctioned at low prices, the grain market is being held back by high levels of stored grain and finance for smaller operators is difficult to access; thus hampering improvements in market conditions.
“The truck and dog market is expected to continue to be impacted by a limited number of new construction and infrastructure projects requiring new equipment.”
Maxitrans expects demand for new tippers to improve when the bulk of the second hand equipment on the market has been absorbed and when the general level of building and infrastructure activity increases.
PLANS TO IMPROVE NZ OPERATIONS
New Zealand remained depressed, with a record low in the overall New Zealand trailing equipment market.
Despite that, performance was on a par with the previous year and the company expected to expand production capacity and diversify into general trailers and truck bodies with a new facility expected to become operational late next calendar year.
A saving grace was the Colrain part of business, which achieved a record profit contribution due to restructuring and cost reductions and new and expanded product ranges.
“The new Arvin Meritor trailer suspension range has resulted in a rapid conversion of customers to Colrain-supplied suspension systems and strong contributions were also secured through the redevelopment of export markets and the supply of components to the Gorgon Project in Western Australia,” the company says.
New product launches as well as an expansion of the Arvin Meritor range are planned for this financial year, to be bolstered by expansion in NSW and the further development of the export business.