Growth initiatives, cost discipline and Jobkeeper bolster bottom line
Integrated transport, logistics and rural supply firm Lindsay saw improvements to its bottom line in the past financial year, with rail transport continuing to grow in company prominence.
Lindsay pointed to its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increasing by 12.1% on the prior year to reach $45.29 million “as the company executed on key growth initiatives while maintaining cost discipline in the uncertain operating environment”.
At a group level, FY21 revenue of $435.2 million was 5.7% above the prior year’s record.
The company’s Transport and Rural divisions both contributed record revenue.
A focus on operational efficiency delivered reductions in corporate overheads despite the disruptive conditions created by Covid‐19.
The cost discipline achieved during the period of growth delivered underlying profit before tax (PBT) of $13.8 million – a 24% increase on FY20.
Lindsay continued to invest in organic growth opportunities in rail, including capital expenditure of $12 million for the addition of 110 new refrigerated rail containers and associated equipment in FY21.
A further $12.4 million was invested in the company’s fleet renewal, safety technology, trailer fleet expansion and other projects.
“The Transport division continued to expand its customer base as its multi‐modal diversification strategy allowed it to offer customers greater access to integrated road and rail logistics services,” the company noted.
The Transport division continues to experience high demand for rail services.
This was highlighted by revenue up 5.3% to $297.3 million in FY21 with $17.5 million generated by growth in the rail segment during the year.
“The growth was partly offset by a reduction in import/export services revenue from Lindsay Fresh, which was negatively impacted by Covid restrictions throughout the year.
“Lindsay intends to continue to invest in its rail capacity, which offers a less capital intense growth path that is highly complementary to the company’s established road fleet and network of refrigerated facilities.”
In FY21, rail capacity was expanded with the addition of 110 refrigerated containers, taking the total to 294 by year end.
The division plans to add another 50 refrigerated containers in the first half of FY22.
Meanwhile, the Fresh Logistics business was materially impacted by Covid‐19 in the year.
Revenue from import/export services was lower as a result of the reduction in available air freight services – down 22.8% compared with FY20.
The business mitigated some of the downturn in trade by accessing the Government’s JobKeeper program, receiving $2.06 million in wage subsidies during FY21.
“The division expects air freight restraints to continue while airlines operate at reduced capacity,” the company added
Further, the Rural division focused on serving high‐growth horticulture regions while unlocking supply chain synergies through the Transport division.
Its contribution increased by $9.2 million, or 7.2%, on the prior year, driven by sales growth across several key regions and the performance of its Woolgoolga branch, which started trading in the second half of the financial year.
Rural encountered longer shipping times for products manufactured overseas but was not materially impacted by Covid‐19.
“FY21 has seen the Company deliver a strong result despite the challenges presented by what has been a highly fluid environment,” company CEO Kim Lindsay commented.
“The outcome is testament to our employees who have remained committed to Lindsay as the Company ensures Australia’s food supply chains remain unimpeded by the disruption of Covid‐19.
“Our ongoing drive to diversify the services available to our customers and deliver new and innovative solutions has helped the Company to mitigate the challenges and take advantage of opportunities that presented during the fast‐ changing conditions seen over the year.
“We continue to see strong demand for both our road and rail services and will further expand our operational capacity in FY22 to meet these needs.
“Rural will also continue to expand in FY22, benefiting from the full year contribution of its new Woolgoolga branch and emerging opportunities to extend our low‐cost branch model.
“The year demonstrated Lindsay’s disciplined approach to costs while growing our businesses. The Company will continue to drive organic growth forward in FY22 while maintaining a watching brief on any transaction‐led opportunities that may arise.”
The company also reiterated its earlier flagging of a fuel tax credit (FTC) audit by the Australian Taxation Office (ATO).
More on the ATO fuel tax probe, here
“In June 2021 the ATO completed its FTC audit and issued a notice of amended assessment relating to FTC’s previously assessed.
“The notice relates to the review period of May 2017 to June 2019 which included claims for periods dating back to 2006.
“The amended notice of assessment is for an amount due of $6.16m (excluding interest).
“In addition to the ATO assessment, the Group has also incurred costs relating to the same review period for FTC claims not submitted to the ATO totalling $918,000.”