A third of the way through, Byrne cheers ‘transformation’ strategy
Toll Group has reversed its recent financial direction, returning to annual results growth after a huge slump.
Earnings before interest and tax (EBIT) was $119 million for the year ended March 31, an improvement of over 70 per cent on the 2017 financial year.
The Japan Post subsidiary notes that this year’s financial results show annual profit and revenue gains for the first time in three years.
Toll Group MD Michael Byrne says the performance marks “the successful execution of the first year of Toll’s transformation strategy”.
“Having successfully delivered on the first year of our overall three year transformation program, we are a leaner business, creating more value for our customers,” Byrne adds.
“This turnaround has been driven by the 44,000-strong Toll team who have done an outstanding job of implementing this program of rapid and significant change.
“While Toll is much stronger than this time last year, we remain vigilant.
“Our transformation continues, and our results to date show that our strategy is the right one for today’s markets and the long-term opportunities ahead.
“We will continue to focus on delighting our customers, disciplined cash flow and being smarter with our costs.”
The company nominated the financial year highlights as:
- revenue of $8.2 billion, up $309 million compared to last year.
- Global Logistics reported an EBIT of $191 million, up 13 per cent, on the back of strong performances in Asia and in key segments in Australia including government and defence, mining, energy and retail.
- Global Express delivered a $59 million turnaround compared to last year’s result, driven by an improved operating cost structure from transformation activities in network consolidation and productivity.
- Global Forwarding returned to profit, delivering close to a $9 million improvement to EBIT, despite a challenging market resulting in reduced margins. “This was delivered through cost improvement initiatives, including exiting unprofitable countries, which have set the business up for future growth. Customer satisfaction reached record levels in the financial year,” the company says.
- a reduction of over 16 per cent in total injuries in for the financial year as a result of an increased focus and investment in this area, which will continue to be a priority in the coming year.
- delivery of 1,000 new fleet and equipment, part of a six year $1.6 billion asset investment program.
- A further 1,500 of the latest in fleet will be added to our network this year. “The incredible safety technology and fuel-efficiency of these assets will create new possibilities for our network with improved safety and maintenance costs as well as reduced emissions,” Toll says.
- close to $600 million capital expenditure on fleet, vessels, infrastructure and technology, resulting in an overall negative cash outflow for the year.
The turnaround effort was due to EBIT falling from $379 million to $69 million over two years.
The Toll statement comes as Japan Post released its group annual results in Tokyo.
The parent company confirms that during the year, Toll kept in its position as the core of headquarters’ global expansion.
“We also proceeded with the Transformation plan measures such as revising Toll’s organisational structure by unification and simplification of divisions and reducing headcount in the process to contribute to the enhancement of the Japan Post Group’s corporate value,” it says.
“In addition, Toll worked to improve its consolidated financial results by promoting growth strategies such as capturing the logistics needs in high growth fields such as health care, among other measures.
“As a result of these initiatives, ordinary income amounted to ¥704,890 million (up ¥59,911 million year-on-year) and net ordinary income amounted to ¥6,544 million (compared to net ordinary loss of ¥414 million for the fiscal year ended March 31, 2017) owing to increases in ordinary income and net ordinary income in the Global Logistics business and a decrease in net ordinary loss in the Global Express business and the Global Forwarding business.
“In addition, operating income amounted to ¥704,302 million (up ¥59,886 million year-on-year) and net operating income amounted to ¥10,254 million (up ¥4,611 million year-on-year) in the international logistics business of Japan Post Co. for the fiscal year ended March 31, 2018.”