Diversification seen as key to riding out WA downturn
CTI Logistics has seen its half-year profits plunge 72 per cent to $5.5 million compared with the previous first half, while its shares have been on a tear for the four days before its results announcement.
The price fell from this year’s peak of 89 cents on January 5 to 80 cents a share last Monday before erasing all that to start trading today at 91 cents.
The interim result was marked by one-off items and revenue was steady, up just 0.2 per cent to $79.1 million.
Executive chairman David Watson points to diversification both within and beyond transport as contributing to the promising result.
“As a transporting and warehousing company we did well during the mining boom in Western Australia,” Watson says in a letter to shareholders.
“While a downturn was not unexpected, when it arrived two years ago we were suddenly competing in a market with severe over-capacity and weakening demand, leading to price and margin pressures which reflect through to the bottom line.
“We have fought these pressures with productivity improvement and cost reduction initiatives, supported by the implementation of enhanced IT operating systems in both transport and warehousing.
“These initiatives are ongoing and we have already seen the benefits.”
Meanwhile, as it has throughout recent hard times, CTI promises it is open to acquisitions if a fitting options turn up.
“We are also looking at several opportunities for fir expansion and growth, within WA and also nationally, where out earlier diversifications with GMK Logistics and out SA operation have already helped offset the downturn in WA,” Watson says.
‘Alongside the above we are continuing to improve our security business, which installs a new state-of-the-art alarm monitoring control system, which also enhances out video surveillance capability and facilitates a lone worker safety package.”
The first half result was helped by the one-off $2.87 million non-core property in Malaga, as it foreshadowed six months ago, as well as hindered by the $290,000 deferred contingency payments for the GMK buy.
Operational costs lines were quite steady with property costs the biggest mover, up 40 per cent to $5.489 million and subcontractor expenses dipping about 6 per cent to $19.2 million.
Drilling down a bit, transport revenues were down about 6 per cent to $32.8 million with logistics up about the same to $43.1 million.