WA heavy haulage a shining light but Covid impact worries group
JobKeeper helped K&S Corporation’s annual profit to rise strongly last financial year.
The bottom line was a 63% rise in net profits to $18.1 million compared with last year’s $11.1 million, bolstered by a pre-tax jobs subsidy of $16.2 million gained in the September quarter.
The group also copped $6 million in costs: $4.7 million impairment on carrying value and buildings and land; $900,000 on restructuring costs mainly due to its Hyde Park Tank business exit.
The result came on the back of a 13% revenue fall to $688.5 million, due to “a combination of the cessation of contracts, exiting of underperforming business units and Covid-19 related reduced customer activity”.
K&S hailed its record of nil Covid-19 infections and praised its workforce’s “proactive engagement and support” for it.
But it noted that the pandemic’s effect on business was a concern.
“It is not possible to forecast with any certainty the magnitude of the Covid-19 impact on the Australian and New Zealand economies or upon the group itself,” it said.
“In FY2021, the group experience reduced revenues in a number of business units . . . as a result of Covid-19.
“At a minimum, the group expect to continue to be adversely impacted by Covid-19 in the first half of FY2022.
“The group’s operations have not been subject to any government-mandated state border closures.
“However, as evidenced by the current lockdown in New South Wales, Covid-19 continued to present a threat to the group’s operations and also to key industry sectors service by the group, such as construction.”
It was also pleased with the performance of its cost-reduction strategies
“In particular, the group has maintained its focus on operational efficiencies, supplier renegotiations, cessation of underperforming activities, and the rationalisation and replacement of specific fleet assets that reduced operating costs,” it said.
Read about K&S’s previous full-year results, here
K&S also continues to bask in the Western Australian mining boom, after suffering during the years after the end of the last one.
Its WA heavy haulage business “enjoyed a strong year . . . on the back of record commodity prices driving mine refurbishment activity”.
But some other units suffered or trod water.
Chemtrans was affected by weather events, explosives-cartage firm Hi-Ex had “minimal activity”, while aviation and general fuel operations fell foul of the pandemic.
There was a mixed picture on the intermodal front.
“Intermodal steel and timber volume from our major customers were strong, with major infrastructure projects undertaken by the various state governments under pinning ongoing activity levels,” K&S stated.
“We continue to incur increased costs in our trail transport operations as a result of increased rail network costs.
“We have focused on securing parcels of rail volumes that improve our rail network balance and performance.”
Of the business units, the Australian transport arm saw a net profit after tax rise to $12 million from $5.5 million on a revenue fall to $585 million from $625 million.
For fuel operations this was down to $1.45 million from $3.1 million on a fall to $68 million from $180 million.
The New Zealand business was positive, with the profit up to A$4.6 million fromA$2.5 million and revenues up to AQ$61 million from A$54 million.
Meanwhile, expenses fell on almost every reported line.
Spending fell on contractors from $186 million to $174 million, employees $258 million to $218 million and fleet $142 million to $117 million.