Rural demand shields MaxiTrans

Trailer maker waits on general economic upturn to lift flagging profits

By Rob McKay | May 31, 2011

The agricultural cavalry looks set to rescue MaxiTrans from any chance of dipping into red ink at the end of the financial year.

Having flagged twice in half a year that the market was as subdued as the much of the economy is, the listed trailer maker says it is gaining some support from rural demand and the performance of its New Zealand arm.

"Whilst order intake in Australia for trailers has remained relatively flat, orders for vans and tippers has improved," Managing Director Michael Brockhoff says in a market update.

"This is especially notable in agricultural tippers."

Though the company did not mention domestic agricultural production, increased demand in the sector would seem to reflect an expected realisation of Australian Bureau of Agricultural, Resource Economics and Sciences (ABARES) projections for grain harvests.

In its March quarter Australian commodities report, ABARES analysts saw crop volumes rising steadily from the drought-induced trough of two years ago.

"Favourable forecast prices and a high soil moisture profile in some grain growing regions are expected to result in the area planted to wheat rising by 3 per cent in 2011-12 to 13.8 million hectares," they say.

"Despite the forecast increase in area, wheat production in 2011-12 is forecast to be around 24 million tonnes as a result of an assumed decline in yields from the record achieved in many regions in 2010-11."

They added that production of "grains and oilseeds in Australia over the medium term is projected to increase by 2 percent (between 2011-12 and 2015-16) to reach 45 million tonnes by 2015-16".

MaxiTrans noted that Hemelex White has been integrated of into its Ballarat facility and the retail branch and service facility in Dandenong are complete.

While annual net profit after tax was expected to be $1.8 million down on last year to $4 million, net debt would fall $10 million to $21.9 million "on the back of property sales and solid operational cash flows".

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