Cost of profitability focus, fleet upgrade and restructuring spills red ink
McAleese Group first annual results as a listed company has seen net profits plunge $80 million and into the red.
In a period of transition and restructuring marked by its stock-market listing, the Cootes Transport tanker tragedy at Mona Vale and a rationalisation of its services, net profits after tax and “significant items” fell from $18.9 million to a loss of $63.3 million.
Major aspects in the $75.8 million of significant items costs include a $30.7 million impairment of goodwill and intangibles, $16.7 million in plant and equipment impairments, $17 million in restructuring costs and superannuation and $11.3 million related to the Mona Vale accident response.
On the plus side, revenues increased 2 per cent to $760.3 million on bulk haulage contract wins and renewals that offset a “sharp decline” in in north Queensland project work for the Heavy Haulage & Lifting (HH&L) arm.
HH&L revenues fell 26.4 per cent to $186.5 million and profits after tax from $54.9 million to $19.2 million, while bulk haulage’s revenues rose 51.2 per cent to $265.2 million, though its profits after tax fell from $20.6 million to $14.4 million.
The oil and gas division’s revenues were down 6.7 per cent to $295.4 million, with profits after tax falling from $14.9 million to a loss of $61.7 million.
The new specialised transport business centred on WA Freight Group gained revenue since April of $13.1 million and profits after tax of $98,000, with the purchase of that company having cost $14.1 million including $4.1 million in goodwill.
McAleese gained $5.6 million from the sale of Singapore firm Watt Wah Petroleum Haulage.
Now confirmed in in his position as McAleese managing director and CEO, Mark Rowsthorn has the company’s eyes set high.
“Our medium-term aim is to diversify our business across a range of activities, geographies and industries,” Rowsthorn says.
“Our vision is to become a significant third force in Australian logistics through sustainable growth in specialist areas and we are laying a solid foundation for this strategy.”
With the Cootes arm facing hefty fines at a Sydney court hearing that has been adjourned to September 10, McAleese has detailed its fleet improvement program progress.
This was defined as:
- completed national safety audit of all Cootes vehicles
- commissioning of 32 new prime movers in NSW fleet costing $7.2 million
- de-commissioning of 160 units, reducing average fleet age at June 30 to 2.3 years for prime movers and 4.5 years for fuel tankers in NSW
- installation of brake roller testing systems across all three NSW workshops with tolerances set in advance of RMS minimum standards at a total cost of $240,000
- acceleration of programs to ‘retro-fit’ Electronic Braking Systems on all trucks, now due for completion by December 2014 five years ahead of requirement date of 2019
- additional investment of $7.2m on fleet infrastructure and upgrades and a further $4.5million on repairs and maintenance
- a second workshop facility at Smithfield to reduce reliance upon third parties
- additional safety checks for all vehicles in between normal servicing cycles
- employment of a former RMS inspector to a new role of quality and compliance manager with responsibilities including vehicle quality inspections
- employment of a new national workshop manager to drive improvements across all servicing and maintenance and to enhance consistency in approach to same
- additional training of maintenance staff by third party specialist in braking system diagnostics and maintenance
- maintenance staff being sponsored through the same TAFE courses in heavy vehicle inspection regulations as those utilised by the RMS.
- a former RMS trainer engaged to train mechanical staff and to reinforce the inspection standards expected by RMS inspectors
- independent third party review of all brake testing processes and equipment
- monthly reporting and consultation meetings with RMS staff
- re-accreditation from NHVA in fatigue management and mass load management.
Meanwhile, the company’s board has attracted international corporate lawyer Kerry Gleeson as a non-executive director, along with interim CFO Warren Saxelby at the end of his contract, while losing executive director and founding shareholder Keith Price.
“Keith has been instrumental in the establishment and growth of the company,” Chairman Don Telford says.
“He has over 40 years of industry experience and will continue to play a critical role in the evolution of the organisation.”