Hefty fall in first half profit may mask increasing activity in traditional markets
K&S Corporation sees signals of an improved market despite a 44.6 per cent fall in first half profits compared with the previous first half.
The diversified transport company made a $5.6 million profit for the period on a 12 per cent fall in operating revenue to $258.3 million.
“After a disappointing first quarter to FY2014, we have seen some modest improvement in underlying trading conditions in the second quarter of FY2014,” Managing Director Greg Stevenson states.
“We are also seeing some benefit from the steps taken to reduce costs to align the cost base with customer volumes.”
The decrease in operating revenue is largely due to the weakness in eastern state, lower activity levels in Western Australia and the cessation of the Australian Paper contract at the end of last June.
The result was affected on a pre‐tax basis by $970,000 by one-off reorganisation costs and transaction costs associated with the current merger with Scott Corporation.
Acceptances from Scott Corporation shareholders stand at 92.86% of that firm’s issued share capital, giving K&S effective control.
The merged group will have annual revenues of approximately $750 million, a market capitalisation in excess of $200 million, and more than 2,000 employees, K&S says.
The company expects recent contract wins in Western Australia with Argyle Diamond and Kimberley Diamond together with New Zealand contracts gains with NZ Steel, Miraka and Sequal Lumber to assist its second half performance.
“Providing earnings guidance for the second half remains difficult,” it says.
“However the lower [Australian dollar], more accommodative interest rate environment and the recently announced infrastructure projects may in time help stimulate the domestic economy.”