Rail and rural focus keeps Lindsay Australia on track


Revenue continues to break records but profit slides as Covid-19 hits

Rail and rural focus keeps Lindsay Australia on track
Rail freight has been a great boon to Lindsay's bottom line. Image credit: wagonfreak.blogspot.com

 

Sound diversification strategies have largely shielded Lindsay Australia from the impacts of Covid-19, its full-year financial results highlight.

Group revenue grew 6.6 per cent to $411.51 million, another yearly record, however net profit after tax decreased 40.1 per cent to $5.32 million.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) for the financial year also increased $2.68 million to $40.4 million, an increase of 7.1 per cent.

The strong overall revenue lift result was supported by the expansion of refrigerated rail and record sales in Lindsay Rural, the company cites.

Broken down into individual divisions, Lindsay Transport’s freight revenue grew 5.3 per cent to $282.43 million, buoyed by the addition of 110 refrigerated rail containers throughout the year.

Highlighting the rail emphasis, its contribution to the Transport division increased by $22.26 million (243 per cent) "due to fleet expansion and customer additions which offset reductions in road freight produce volumes which were negatively impacted in some regions due to adverse weather and seasonality".

Lidnsay’s rail fleet will expand further in FY2021 with the addition of 75 new refrigerated containers and 20 dry containers, the company notes.

Elsewhere, Lindsay Rural grew revenue by 12.9 per cent to $128.66 million, "benefiting from a renewed focus on high growth horticultural regions after the divisions FY2019 strategic review", which included the closure and consolidation of several marginal branches.

The news wasn’t as good in the import/export Lindsay Fresh logistics sector.

While revenue increased by 12 per cent overall, Lindsay Fresh was materially impacted in the fourth quarter due to Covid-19, having "experienced a material decline in revenues since the onset of the pandemic due to a lack of air freight capacity and associated export services".

It was therefore eligible to JobKeeper subsidies up to $870,000.

Lindsay notes its import/export logistics sector will remain a challenge for the first six months of FY2021 as reduced air freight services remains an issue, which will also impact the segment’s ancillary services.


How Lindsay foretold its Covid-19 challenges, here


"We are pleased to announce a solid set of results for the 12 months to 30 June 2020 despite the Group facing a number of unprecedented challenges during the year," company director Kim Lindsay says.

"Record revenue underpinned a solid underlying earnings result.

"Our investment strategy in recent years to expand the Group’s geographical reach and the range of services we offer has mitigated some of the challenges we faced during the period.

"Rail remains a key growth strategy for the years to come, expanding the Group’s rail capacity will allow Lindsay’s to continue to diversify its service offer to mitigate seasonal risks.

"By the end of 1H2021 we will have 281 rail containers in the Group’s fleet, allowing us to increase the number of lanes we service and expand our rail offer to both new and existing customers".

The company’s key capital expenditure for the year includes the following projects:

  • the addition of 110 new refrigerated rail containers and associated equipment of $11.40 million.
  • opening of Sydney distribution hub in March 2020, including capital investment of $7.80 million for the Lindsay specific fit-out which features significantly increased cold storage capacity, purpose- built workshop, bulk fuel facilities and driver accommodation
  • driver safety monitoring program roll-out completed in the first half of the year to the Group’s 300 interstate prime movers.
  • real-time trailer tracking and temperature monitoring technology roll-out completed for all refrigerated trailers and containers.

"Despite the challenges in FY2020 the Group remained committed to delivering on a number of key projects to support operational efficiencies, equipment utilisation and driver safety," Lindsay says.

"The driver safety monitoring project was completed in 1H2020 alongside the completion of the real-time trailer monitoring roll-out".

"The new Sydney distribution hub located in Erskine Park was completed in March 2020.

"The new facility provides much needed increase in cold storage capacity, a purpose built workshop, on-site bulk fueling and driver accommodation facilities.

"As a leading national essential service provider to the logistics, horticulture and food related industries, the Group remains committed to maintaining its essential services during the unprecedented times and continuing its key role in the food supply chain."

 

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