Refrigerated Logistics remains AHG weak point for now

Group expects reform of division to start paying off in second half

Refrigerated Logistics remains AHG weak point for now
John McConnell is looking to improved logistics margins


Refrigerated Logistics continues to be a challenge for Automotive Holdings Group (AHG) as the division’s first half earnings slipped and profits plunged.

Already the subject of a transformation program, the 7.2 per cent revenue fall for $285.9 million and 85 per cent profit before tax fall to $1.9 million can only increase ongoing speculation about its future.

But, in line with earlier signals from the company, new MD John McConnell, in his first results commentary with the firm, is hanging tough on a segment that is seen to have upside once the program takes hold in the second half and which would not get a proper return if sold now.

In place is a:

  • single management structure across four trading brands – called Fresh, Chilled, Frozen and General
  • revenue build continuing from January last year 2016, albeit at a slower rate than then, with new client wins and clear focus on client service
  • technology platform now aligned to new operating model with planning underway for final testing and implementation.

It sees four gains to be had from technology improvements:

  • automation to substantially reduce manual inputs
  • new transport management system to enhance network planning capabilities and fleet utilisation
  • warehouse solution enabling standardisation and operational savings
  • improved customer profitability and business intelligence capabilities.

 "In Refrigerated Logistics, we expect to see significant savings and margin improvement from the transformation program and there are strong prospects for increased revenues from new contracts," McConnell says.

"We also anticipate a solid finish to the financial year from the Other Logistics division."

That division saw earnings down 20.5 per cent to $148.3 million, following the sale of Covs, but profits before tax up 133.9 per cent to $1.7 million, with a strong outperformance in KTM offsetting weaker truck parts market for Amcap.

 In the Automotive division, though no details were give, first-half truck sale volumes were said to be weak, particularly in Western Australia, but conditions stronger in the start of the second half.

The period featured the $2.75 million purchase of Laverton Trucks, dwarfed by far by it car dealership buys.

For the group as a whole, the bottom line was a 19.8 per cent fall in net profit to $38.7 million, impacted by one-off asset purchase costs and $700,000 in leadership transition costs involving McConnell and Bronte Howson

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