McAleese diversifies with WA Freight Group buy


Rowsthorn highlights strategy to lessen volatility as company faces challenges group-wide

McAleese diversifies with WA Freight Group buy
WA Freight Group is now part of McAleese

 

In a diversification move, McAleese Group will buy Silk Group entity WA Freight Group (WAFG) for $15.4 million even as it struggles across its divisions in the March quarter.

The group has already announced a retreat from fuel tanker operations due, it says, to poor returns, with WAFG marking an entry into previously untouched cargo streams.

"Our acquisition of WAFG establishes a platform for further growth and diversification across geographies and transport sectors within the group," McAleese CEO Mark Rowsthorn states of the purchase, which should be finalised this month and "marks an effort to lessen the impact of any volatility in the resources sector".

"WAFG has an established and diverse customer base, well-located facilities and experienced personnel.

"We plan on leveraging the capabilities of this business further via organic opportunities and future complementary acquisitions in the Australian freight logistics sector."

WAFG management will stay in place and $5-$7 million invested in asset upgrades.

The purchase price is put at 2.5-3 times WAFG’s EBITDA on revenues of $90 million.

With subcontractor and owned fleets, its main depot is in Forrestfield, which also looks after Perth operations.

It also has depots in other capital cities servicing mainly east-west express freight for small to medium enterprises.

Meanwhile, McAleese sales revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to be $9 million and $7 million lower respectively than forecast.

The firm flagged operational difficulties, some of which it touches on now, in its half-year results in February.

McAleese Oil & Gas is still working through Cootes-related problems, McAleese Resources has seen mine activity an haulage requirements boost contractor and maintenance costs and its Specialised Transport & Lifting arm has suffered very fast decline in Queensland LNG-related heavy haulage demand and weather events in Queensland and Western Australia that have affected shipping schedules.

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