Archive, Industry News

Knudsen defiant as Toll continues to fight uphill battle

Japan Post interim results suggest subsidiary not out of the woods yet

 

Japan Post’s (JP’s) half-year financial report shows subsidiary Toll looks to have stemmed some of its bleeding in the face of recent intense scrutiny – and a potential sale of its Global Express arm.

While still operating at a loss in the six months ending September 30, the curve has plateaued somewhat on the back of a stronger second quarter, Toll managing director Thomas Knudsen explains in a video accompanying the results.

JP is keen to emphasise Toll’s business – comprising the Global Logistics, Global Forwarding and Global Express divisions – combined for $5.1 billion revenue, an increase of $869 million on the prior corresponding period (pcp).

This is still more than offset by operating expenses growing by a bigger margin – about $890 million to $5.18 billion.

However, a total loss of $84 million, $21 million more than the pcp ($63 million), is comparatively better than the sharp turnaround of more than $100 million on the $40 million profit from 2018 to 2019.

“Operating income increased by A$869 million (an increase of 20.6 per cent year-on-year), due to large-scale handling of Covid-19 prevention supplies by the Global Logistics Asia division, which continued through the three months to September 30, even amid declining revenue with lower volumes handled in Global Express due to the impact of Covid-19 and targeted cyber attacks,” JP explains.

Broken into the individual divisions, Global Logistics posted a $65 million profit, an increase of $22 million on the pcp, with global forwarding halving its losses from $6 million to $3 million.

Corporate/other is also improved, from a $37 million loss in 2019 to a $24 million loss this year.

However, it’s the under-pressure and for-sale Global Express division that continues to waver, with a $41 million loss in 2019 ballooning to $121 million this half-year.

“Other expenses increased by A$890 million (an increase of 20.8 per cent), exceeding the increase in operating income, as cost reductions in Global Express were not enough to compensate for the decline in revenue, resulting in a net operating loss (EBIT) of A$84 million (a year-on-year increase of A$20 million in the net operating loss),” JP continues.


The outlook was more ominous in JP’s quarterly update


Knudsen comes out on the front foot to address the results in a rare public showing.

The results come at a time when Toll confirms its Global Express division is up for sale, while the company remains the subject of mainstream coverage alleging operational and financial irregularities.

In what reads like a pitch to potential buyers, Knudsen says the half-year report “is exciting on many fronts”.

“While 2020 has brought with it challenges and economic headwinds our purpose and strategy has remained steadfast and we are seeing positive results emerge,” he says.

He points to the 20 per cent revenue increase, noting the second quarter has seen a huge turnaround in fortunes.

“Each Toll division has made a profit, and at a group level we delivered a $119 million profit improvement in the second quarter,” he says

“We turned cash flow positive in July, which continued into August and September.”

Knudsen says Toll now has available liquidity of close to $1 billion, “and the continued support of our shareholder Japan Post”.

“It’s pleasing to see the strong ongoing recovery in our business and I’m optimistic that we’ve put the biggest challenges behind us,” he says.

 

Previous ArticleNext Article
Send this to a friend