K&S staves off ongoing market challenges


National carrier stays in the black and eyes savings and internal improvements

K&S staves off ongoing market challenges
K&S remains in the black

 

The tidings at K&S Group remain grim on certain fronts but the firm will take solace in some aspects of its financial year performance.

Its focus for the future will be predominantly internal and on organic growth.

"It is anticipated that the consolidated entity will continue to expand transport and logistics operations during the next financial year by further extending its services throughout Australia and adopting the latest technology in the industry to contain costs and enhance the services offered to customers," it says.

More particularly, it aims to "focus on the improvement of our safety performance, revenue growth and the reduction of our operating costs.

"A key component of this will include our ongoing consolidation of operating sites, rationalisation of supporting infrastructure and the exiting of leased properties in locations where synergies are possible.

"These predominantly currently reside on the eastern seaboard in capital cities."

Despite a near-halving of its net profit from $15.9 million to $8.9 million, the national operator did see operating revenue grow from $565 million to $586 million.

And synergies from the Scott Corporation merger have been reported of $3 million from back office, administrative and equipment costs.

Beyond that, the company’s focus has been on battling to limit costs where it can.

"During the difficult year, we have continually reviewed our cost base and we have reduced fixed and variable costs from operations," it says.

"We have reduced subcontractor costs, labour, overtime and equipment costs as volumes have declined.

"We implemented a freeze on new employment as a measure to reduce costs."

Contractor expenses are down from $170 million to $151 million.

However, employee expenses rose from $168 million to $184 million and fleet expenses from $96 million to $118 million.

Prime movers and trailing equipment worth $32.5 million was bought, with $28.1 million through hire purchase and $4.4 in cash.

On operating conditions, the company paints a picture of the state of the broader economy.

Its Western Australian business was impacted by the continued slowing of the resource sector, "with declining commodity prices the miners reduced their costs and scaled back projects".

The manufacturing sector remained subdued.

"Imports are still impacting the demand for locally manufactured goods and this in turn reduces demand for long haul transport services," the firm says.

The Australian Paper contract loss of July last year was still being felt − it has been worth above $30 million a year "and provided efficiencies in our major branches that were difficult to replace in the short term" − have partially been offset with Schweppes and Norske business.

 

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