K&S back on profit track with full year rebound


Business units performing as company accelerates out of the red

K&S back on profit track with full year rebound
K&S Energy has gained new contracts

 

K&S Corporation has seen its net profits return to the black after last year’s hefty loss.

Whereas 12 months ago, financial lines featured the term "down", it was all "up" this year, with net profits at $6.5 million and revenue rising 9.7 per cent to $755 million.

K&S shareholders saw a loss of $104 million the previous financial year, a $13.3 million profit in 2015 and of $8.9 million in 2014.

The positive full-year result followed a quite bullish first half performance based on resurgent eastern state operations.

"A pleasing aspect of the year has been the improved performance of many business units," the company reports.

"Our intermodal, contract logistics and New Zealand businesses benefited from higher volumes.

"Our K&S Energy business achieved significant growth, through awarding of major new contracts in Western Australia and South Australia.

"Our Western Australian resource business continues to be impacted by the lower activity levels in the mining industry.

"We anticipate improved activity levels in the new financial year due to mine depletion and increased commodity prices.

"In late January 2017, we merged with Scott’s Transport industries via the transfer of certain assets of STI into K&S Freighters.

"The integration process is well advanced and consistent with pre-merger assumptions."

After a period when the only news coming its way was bad, not least the loss of steel group Arrium’s impending failure, now a different tone prevails.

"The recent announcement that London-based GFG Alliance has agreed to purchase the Arrium group of companies will provide a benefit, with Administrators advising that a return to creditors will be paid in September 2017 subject to the sale process being completed on 31 August 2017," K&S reports.

"The size of the return is not known at this time."

The fuel business reported revenues up from $123.8 million to $138.7 million but a net operating profit fall from $2.16 million to $2.06 million.

The New Zealand business did some heavy lifting, with profits rising from $1.86 million to $2.47 million

Meanwhile, cost reduction strategies have continued to be implemented across the business.

These include property lease cost reductions, the rationalisation and replacement of specified fleet, employee reductions, and IT solutions being developed and introduced to support customer service, operational efficiencies and cost reduction initiatives.

But some are yet to influence the outcome.

Employee expenses were up from $225.7 million to $249.7 million, contractor expenses from $181.3 million to $193.1 million and fleet expenses from $129.7 million to $149.2 million.

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