Scott Corp reports revenue boost

Scott Corporation retains big-name customers to boost its revenue base, but the company is remaining wary of economic conditions

Anna Game-Lopata | September 24, 2010

Scott Corporation has reported an 11.86 percent increase in revenue since last financial year – a $17.05 million leap to $160.85 million.

The company says net profit after tax increased from $1.74 million in 2009 to $4.65 million this year.

Chairman Tony Johnson puts the improvement down to the retention of Scott’s two largest customer contracts, including its Baulktrans coal haulage contract with BHPB Ilawarra Coal.

"Scott Corporation has also improved its commercial terms, placed a continued focus on cost and treasury management and enjoyed general improvements in the prevailing trading conditions," Johnson says.

Johnson says Scott Corporation has now delivered on most of the objectives under its existing strategic plan.

"We are confident that the company’s strong balance sheet, prudent treasury management and strong reputation in the marketplace will enable us to continue to pursue relevant growth opportunities within its existing markets and beyond," he says.

Despite Scott’s bullish predictions Johnson says the board is wary of continued vulnerability of the global economy.

While the first half of the year was particularly strong due to buoyant coal volumes in the Illawarra coal fields, coal volumes in the southern coal fields fell 17 percent in the second half.

"Strong sales in the first half depleted stock levels, and there were simultaneous long wall changes at two collieries during January 2010," says Managing Directror David Keane.

"This was followed by production issues at one of the collieries which lasted several months following completion of the long wall change. The lack of coal meant that export activity was scaled back notwithstanding strong overseas demand for the product.

A Victorian based manufacturer of styrene closed its West Footscray operations at the end of December 2009, impacting Scott’s Chemtrans business which provided contracted transport services generating an average of $4.5 million in revenue.

"Both events explain why revenue and net profit after tax in the second half were lower at $78.76 million and $1.70 million respectively," Keane says.

Johnson says the company is cognisant that during the 2011 financial year it is likely that Scott Corp will not enjoy activity levels similar to 2010 since parts of its second largest contract representing approximately $8 million in revenue will cease.

"Given these issues, if all other factors remain stable, we are not anticipating that the profit levels will remain as high as they were in 2010," he says.

"However as a group we are focused on assessing all opportunities to provide additional revenue and profitability into the business to deliver a continuation of the improvement in the underlying performance of the company."

David Keane says Scott Corporation intends to pursue opportunities to consolidate its share of the national dangerous goods market.

"We plan to examine possibilities to extend our reach in the bulk road transport services beyond our current scopes," he reveals.

"We will also examine other industries which we are currently not competing in but are ally to our bulk specialist vision and provide strong growth prospects.

"It is our intention to remain a publicly listed company with an aspiration to continue to grow our revenue at potentially a more significant rate."

Scott Corporation reports a total cash inflow of $5.47 million for the year and negligible bad and doubtful debts.

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