Refrigerated logistics arm rebounds as AHG profit is hit


Series of items linked to restructuring and changes, along with car market softness, hurt bottom line

Refrigerated logistics arm rebounds as AHG profit is hit
John McConnell praises Refrigerated Logistics’ second half performance

 

Automotive Holdings Group (AHG) has its much-maligned refrigerated logistics division to thank for a sliver of good news in its annual results.

The arm that has copped negative financial commentary in the past 18 months but its earnings before interest, tax, depreciation and amortisation (EBITDA) was a source of praise from AHG managing director John McConnell.

"We delivered a strong performance in Refrigerated Logistics in the second half of the year, with EBITDA up 68 per cent on last year as the restructuring of the division began delivering expected improvements," McConnell says.

And the company’s Other Logistics division, which includes the AMCAP parts distribution business and the importation and distribution of KTM and Husqvarna motorcycles, also outperformed the previous financial year.

Net profits for the group were down $35.5 million, or 38.4 per cent, to $55.5 million, despite revenues rising 8.1 per cent to $6.08 billion.

Refrigerated Logistics saw a second-half resurgence that saw operating earnings at $17.1 million compared with the previous first half of $10.2 million.

But it still reported a loss on earnings before interest and tax (EBIT) of $527,000 million, down 103 per cent from last year’s $15.6 million, while revenue fell only 1.7 per cent to $571 million.

"The decrease was attributed to higher fixed cost base, investment in plant and equipment and higher working capital during the year," AHG says.

The company notes productivity improvements include:

  • Headcount reduction of 192 against target of 125
  • Significant reduction in pallet hire costs
  • Reduction in utilisation of subcontractors and improved use of company fleet
  • Consolidation of facilities.

Technology improvements include a Microsoft Dynamics financial  package to go live in October and Capcargo transport management system in the third quarter of the financial year.

The division has been undergoing a significant restructure that swallowed $5.8 million for the year.

Other Logistics saw a 13.8 per cent revenue fall the $276 million but gained an EBIT in the black to the tune of $644,000, a rise of 131 per cent on last year’s $2.06 million loss.

"Strong performance in KTM and Husqvarna, plus improved performance from GTB, drove the increase," the company says.

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