Chalmers looks to break costs drag

Company awaits boost from acquisitions and other initiatives as revenues rise but profits fall

Chalmers looks to break costs drag
Chalmers has had a slow year with transport


The subdued profit advice Chalmers issued in June has proved accurate.

The transport and container services firm had expected net profits in the $800,000-$1.2 million range and it duly came in at $1.1 million, a fall of 36 per cent.

Like fellow mid-size operator Lindsay Australia, Chalmers found costs undermining its efforts, given revenues rose 3 per cent to $61.8 million.

The firm put the performance down to four main reasons:

  • Queensland experienced lacklustre volumes largely as a result of drought affected primary production although there was also a significant fall-away in freight volumes towards the end of the year
  • a surplus of warehouse space in some locations saw a lower capacity utilisation
  • higher than budgeted repairs, maintenance and equipment hire costs
  • property costs in Brisbane continued their upward movement in an environment of relatively soft demand.

The fall in subcontractor costs to $5.6 million from $5.9 million could not compete against employee cost rising to $25.2 million from $23.8 million and vehicle and equipment cost at $8.9 million from $8 million.

Like Lindsay with its rural services arm, the transport cloud had a silver lining in the other Chalmers division, containers.

Here, a profit of $700,000 was had on revenue of $18.5 million.

The result was attributable in part to:

  • buoyant grain season in Victoria requiring both increases in food quality container upgrades and increased site activity
  • increased Melbourne property and site maintenance as a result of higher activity
  • a significant decrease in Brisbane volumes and consequent repair activity in conjunction with escalating property lease costs.

"In all areas of the business, activity levels remain subdued both within the industry and across Chalmers operational segments," the company says.

"The downturn experienced during the year contributed to a lower level of capital expenditure in the early part of the year although during the June quarter, significant capital was directed towards new equipment purchases."

Capital expenditure totalled $7.4 million, well above the preceding two-year average of $3.3 million.

The major capital investment was the acquisition in June of the business assets of Australian Terminal Services and ATS Developments, centred on Brisbane’s port.

"While business conditions remain subdued, some inroads are being made into winning new business in the short to medium term," the company says.

"Mr John Carew was appointed managing director during the year and a significant focus of his management approach has been on improved operational efficiencies in all areas of the business.

"A number of initiatives in this area have reduced costs significantly and Directors believe this is a good platform for the year ahead."

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