CTI Logistics defies WA economic drag


Continued business downturn and systems upgrade costs fail to stem profits turnaround

CTI Logistics defies WA economic drag
CTI Logistics is pushing past the WA downturn

 

Impacts from the deep Western Australian economic malaise have crimped state-headquartered CTI Logistics’ annual results recently.

Even now, heavier margins pressure and less business activity there have seen a $2.5 million impairment on warehousing and investment properties.

Also in the mix are costs associated with dealing with the challenges, related to a new distribution model and warehouse management system for its largest warehousing client, along with relocating the New South Wales operations to a new warehouse at Gregory Hills and picking up new clients.

Against this tide, the company managed a 242 per cent net profit turnaround to $20.3 million from $5.9 million on a 21.5 per cent rise in revenues to $150.6 million.

More positive for the outlook has been the start of a cost-saving and productivity initiative in WA, the use of property sale proceeds in lowering debt and the likely sale of two more properties.

But it will continue to invest in the state with executive chairman David Watson revealing a $1.83 million contract to buy an unnamed small Western Australian regional transport business, with settlement expected tomorrow.

"The client base and revenue stream will be rolled into our existing regional freight network, and the purchase is expected to be earnings per share accretive from day one," Watson says of a deal that the company assures will be followed by others.

As with other transport-focused firms, significant outgoings were a savings target, with subcontractor spending falling from $34.6 million to $29.7 million.

But there was little action elsewhere last year, as employee expenses rose from $43 million to $54.2 million, property cots from $5.4 million to $13.1 million and vehicle and transport costs from $13.3 million to $28.7 million.

Of its business segments, profits before tax transport fell from $4.7 million to $2.32 million, but they rose for logistics from $883,276 to $3 million.

 

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