Profit up as company continues acquisitions and fleet investment
K&S Corporation’s efforts to shake off tough market conditions have borne fruit with a near 50 per cent annual net profit boost to $13.3 million.
Operating profit was up 19.3 per cent to a fraction shy of $700 million.
The company hailed its New Zealand arm’s performance – a profit lift from $277,000 to $1.48 million – and the expectation that this would continue but the strength was still in Australia, from $8 million to $10.4 million.
But difficult times were felt in the west.
“Our Western Australian business was adversely impacted by the continued slowing of the resource sector,” K&S says.
“With declining commodity prices, the miners have reduced their costs and scaled back projects.
“This had a significant impact on activity levels and the profitability of our Regal business unit during the year.”
Cost reductions underway include a new transport operations facility at Hazelmere, to be up and running next month, fleet rationalisation and replacement, job losses and “new IT solutions to support customer service and operational efficiency and cost reduction initiatives”.
One common refrain from past years is the effect of manufacturing decline in the core east-coast market and Alcoa’s withdrawal from Point Henry in Victoria and Yennora in New South Wales coloured its contract renewal for Portland activities from April.
“Imports are still impacting the demand for locally manufactured goods, which in turn reduces demand for long haul transport services,” the company says.
Despite that, K&S kept up investments and diversification.
The $2.69 million cost of its March purchase of central north-south rail freight forwarder Northern Territory Freight services (NTFS) provided $48.1 million in revenues.
Fleet investment was looked after to the tune of $55.9 million, with $39.7 million spent on hire purchase and $16.2 million in cash.
Of the $7 million in fraud costs over seven years to last year revealed in February that McGrathNicol has investigated, the firm’s crime insurance policy covers $5 million, which was paid this month.
Costs rose with profits and K&S saw contractor expenses up from $151.2 million to $187.6 million, employee expenses including for the extra 100 NTFS personnel from $185.2 million to $219.1 million and fleet expenses from $188 million to $145.1 million.
Meanwhile, deputy chairman and non-executive director Greg Boulton has retired after 19 years with the company.