Property sale boosts declining bottom line as GMK buy makes positive presence felt
Against a backdrop of the Western Australian economic downturn, Perth-headquartered CTI Logistics has seen a huge jump in net profits underpinned by a solid revenue rise.
But little champagne will be broken out as the company underlines that most of the 372 per cent profit leap to just shy of $20 million was down to the $26 million sale of its Bibra Lakes warehousing and distribution property that realised a near-$19 million profit.
Without the property sale, the profit would have been down 16.2 per cent to $5.03 million compared with the previous first half.
The silver lining is the 21.2 per cent revenue rise to $79 million, which the company attributed to the GMK Logistics input since its June purchase
http://www.fullyloaded.com.au/industry-news/1506/cti-logistics-breaks-out-of-wa-with-gmk-buy/
and the expansion into South Australia with existing customers.
The situation in WA from its point of view looks dire, with the business downturn described as “severe”.
Volumes continue to decline in the general freight and courier markets, which has been coupled with price and margin pressure.
Added to this, warehousing clients reduced throughput unexpectedly late last calendar year, there was a longer-than-expected costs tail to its new distribution model and warehousing management system for its largest client and the weight of building and other costs for the partially complete 13,000 square metres of additional warehouse at Hazelmere.
“While the immediate outlook in Western Australia remains poor and could deteriorate further, the company continues to plan to grow both organically and by acquisition,” director and company secretary David Mellor says.
“We have recently been successful in gaining further warehousing and distribution contracts in the tyre industry, and on the acquisition front we are looking at building on our GMK-related national footprint.”
The first half was marked by a significant rise in ‘motor vehicle and transportation costs, from $6.6 million in the previous first half to $15.3 million.
The first half’s portion of the cost of buying GMK came in at $14.4 million, with the whole figure to be totalled in the full year results, while total income from property and plant and equipment sales was $26.3 million.
The before tax breakdown of transport and the logistics segments showed transport fall from $3.3 million to $2.3 million while logistics rose from $986,000 to $2.7 million.