Lindsay stays in black after challenging year

Queensland company notes structural shift in fresh produce supply chain as central market is bypassed

Lindsay stays in black after challenging year
Lindsay stays in black after challenging year

August 26, 2011

Lindsay Australia’s net profit may have fallen 64 percent but the trucking and rural supplies firm stayed in the black in the last financial year to the tune of $1.39 million.

On the transport side, the Queensland company reported challenging trading conditions due to competitor and customer pressure on freight rates and the impact of bad weather on fleet sales, utilisation rates and operating costs.

This had been exacerbated by additional depreciation and amortisation charges of about $1 million and $600,000 on higher borrowing costs as the company modernised equipment and changed fleet structure to increase the proportion of B-double trailer combinations.

The transport division’s profit was $9.2 million on sales of $160 million, compared with the previous financial years $9.7 million on revenues of $140 million.

"The impact of a structural shift in delivery requirements of produce transported has also emerged during the year," the company says.

"The average consignment as measured by number of pallets consigned to a particular destination has reduced due to volume changes.

"More produce is now being delivered outside the traditional produce market systems and directly to consignees, which causes greater waiting times and delivery costs."

That trend had been forced by "higher produce quality expectations from national produce distributors and [the] decision to bypass the central market" and Lindsay had raised its freight rates to compensate.

The self-funded $770,000 purchase of CLC Produce in Mareeba, an area that Cyclone Yasi spared, helped ameliorate some fleet utilisation issues, including rigs stopped by floods or having to take long detours or having no produce to shift due to weather damage.

The future looks mixed leaning towards the positive for the company, with an expected refrigerated transport capacity shortage possible and higher volumes of bananas expected.

"We have experienced good freight growth in capital cities, particularly Melbourne," the company says.

"We are developing strategic alliances with other transport companies who have a freight profile that provides additional loading for our vehicles and subcontractors who will work alongside out fleet, particularly in our peak times."

Lindsay revealed it uses subcontractors for about 20 percent of its freight business and says the loss of the diesel fuel rebate would, like other increased costs, be passed on through its existing fuel levy.

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