K&S responds to mystery share price leap

Company says it is 'not aware' of any information concerning the sudden change value

K&S responds to mystery share price leap
K&S continues to face challenges in the long-haul sector.



K&S Corporation has been unable to explain a sharp increase in its share price following a request from the Australian Securities Exchange (ASX).

K&S shares rose from $1.025 to a high of $1.20 on Friday before hitting $1.40 and then subsiding to $1.35 this afternoon.

The gyrations come two weeks after senior management explained its actions in response to ongoing challenging market conditions.

It continues to be adversely affected by the Western Australian economic downturn, with a slow mining sector affecting company businesses there.

Moreover, there has been continued slowing of movement across many of its eastern state operations expect New South Wales, where business has continued to grow.

But the management seems hopeful for the third and fourth quarter of the financial year.

"Based on the current trading environment, we expect earning in the second half of FY2016 to be better than in the first half of FY2016, although not as strong as the second half of FY2015," chairman Tony Johnson says.

The east coast market has been plagued by issues including decreasing transport volumes, particularly between Melbourne and Sydney, changes to ordering patterns and direct shipping of overseas goods to final destination, which further reduces the need of interstate freight services.

"The structural decline of manufacturing across Australia continued during the year with the closure of Alcoa’s Port Henry and Yennora operations," Johnson says.

"The closure of these business units had a negative impact on our operations which was partly offset with the awarding of Alcoa’s Portland logistics contract effective from April 2015."

The company is yet to see the lower dollar make a material impact on its interstate business.

"The Australian transport market has materially changed over the past decade," CEO Chris Sarant explains.

"Consequent to reduced Australian manufacturing volumes, and increased direct importation to the state of use, our traditional linehaul transport market continues to decline.

"Diversification of our business into new markets with growth potential and possible integration synergies, is a major focus.

"Accordingly the purchase of NTFS [Northern Territory Freight Services]  during the year will generate new opportunities, particularly with the integration of existing K&S customers.

"It provides both rail and road solutions either as full load or less than full load configurations.

"In addition NTFS has existing FMCG customer relationships which we intend to further develop."

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