Maxitrans battles freight industry doldrums

New Zealand orders and better harvests to be the silver lining

By Rob McKay | February 23, 2011

The stubbornly cold state of general trucking in Australia has continued to plague listed trailermaker Maxitrans, though it was possible to discern cracks in the ice.

The company’s first-half profit saw it suffer a net loss of $198,000, compared with a $2.58 million profit in the previous first half.

Its underlying profit after tax of a touch more than $1 million was cruelled by $1.7 million of restructuring costs, offset by $522,000 in tax benefit from the restructuring.

Revenue fell 17 percent as a result of lower volumes. Unit sales were 21 percent down on the previous first half and 17 percent down on the previous second half.

However, the three months to the end of December saw 4 percent a rise on the previous calendar quarter, with vans and tippers increasing 33 percent and New Zealand up by 138 percent.

Order intake for
the first half
was 27 percent down on the previous first half and 19 percent down on the previous second half.

The New Zealand arm of Marxitrans gave its parent an order-intake boost due the shifting of a regulatory logjam.

The three months to the end of December improved 11 percent on previous three months, driven by a record 983 percent rise New Zealand and a modest improvement in Australian tippers.

Order intake remained flat in the December quarter for trailers whilst vans experienced a 15 percent reduction.

Order banks across most brands now extend to April.

"Demand for new trailing equipment has been subdued since April 2010 as a result of the slow down in the domestic economy," Chairman Ian Davis says.

"Excess capacity across the trailer manufacturing industry continues to exert pressure on pricing and margins."

The short term impact of the recent floods and cyclone in Queensland and Victoria was uncertain but the firm expected demand for trailing equipment to increase in the medium term to replace damaged units and to service the re-construction effort.

It was also looking to an increase in rural tipper demand due to rains boosting the summer grain harvest.

Since its restructuring, its Colrain arm’s performance had been heartening, with "solid sales" and profit growth of 126 percent on the previous first half.

"Focus on existing and new products, effective cost management, distribution expansion and market penetration is delivering results," Davis says.

The amalgamation of the Hamelex White manufacturing operation with the company’s Ballarat facility and the creation of a new retail branch and service facility in Dandenong were approaching completion, with $2 million in savings and reduced product prices expected.

Proceeds from the eventual sale of the Hamelex White and the Maxitrans service division properties in Hallam, estimated at $11 million, will be used to reduce debt during the second half.

Meanwhile, the firm will deepen its international exposure by buying the remaining 50percent equity in its Chinese joint venture company Yangzhou Maxi-Cube Tong Composites Co Ltd.

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