Mining gives firm a boost but pandemic hurts Aero Refuellers
K&S Group’s bottom line has positively bounded out of the pandemic in its first half results, with an underlying profit up 66.6 per cent on the prior corresponding period (PCP) to $6.5 million.
That said, K&S wasn’t unscathed, as the results did come despite a 19 per cent fall in revenue to $343 million, but exposure to the mining sector, so long a drag on the group’s performance, is proving a boon.
The company acknowledges JobKeeper subsidies of $16.2 million put gross earning (EBITDA) 43.5 per cent above the PCP to $51.9 million.
“The underlying profit benefited from a number of operational improvements, cost savings measures and procurement initiatives as well as a $2.8 million reduction in depreciation expenses realised through an alignment in the estimated residual values of the motor vehicle assets to be consistent with their financial lifecycle,” K&S notes.
“In line with the accounting requirements, the change in the estimated residual values has been accounted for prospectively and the full year impact of this change to depreciation expense is expected to be in the range of $5 million ‐ $6 million.
“Operating cashflow for the current period was $40.5 million, $13.5 million higher than the prior corresponding period.
Read about K&S’s previous full-year results, here
Steel volumes from its major customers remained strong, increasing compared to PCP.
“Performance of the contract logistics business was sound.
“Activity in our Western Australia based heavy haulage business has been strong, underpinned by the mining sector which continues to be relatively unaffected by Covid‐19.
“Our specialised aviation refuelling business, Aero Refuellers, has experienced the full impact of Covid‐19 with minimal activity, as well as low fire season activity.
“Collectively these have resulted in a material activity decline in the first half of FY2021.
“Cost reduction strategies have continued to be implemented across the business, in particular, operational efficiencies, supplier re‐negotiations, and the rationalisation and replacement of specific fleet. Ongoing cost reduction initiatives have continued to have a positive impact on the result for the first half of FY2021.”
Of the segments, ‘Australian Transport’ records $13.3 million for the half, up from $386,000 PCP, while ‘Fuel’ is at $1.45 million, down from $1.28 million.
And the New Zealand arm also takes some accolades with $2.42 million. up from $1.23 million.