Transport and Logistics firm K&S proves it continues to do good business in challenging times while bolstering its safety performance
October 8, 2012
K&S Corporation Chairman Tony Johnson has pledged that his firm will remain in an acquisitive frame of mind in the rest of this financial year.
Highlighting the near 11 percent growth in net profit revealed in August’s annual results, a gearing of 21.6 percent that was “well within our target range” and “secure customer contracts”, Johnson was quite bullish in the firm’s annual report.
“We are confident of further growth in our existing customer base and we will continue to bid strongly on new tenders,” he writes.
“We see the momentum from four strong second half to continue into the first half of 2012/13. Opportunities for potential acquisitions will also be closely evaluated where it makes strategic sense.”
Highlighting the effect of the two-speed economy, Johnson avoided making an earnings prediction at a time when the high dollar continued to impact on east coast manufacturers but stable growth was expected in Western Australia.
Saying business from K&S’s top-10 businesses “met expectations”, new Managing Director Greg Stevenson noted a focus on new, smaller contracts had paid dividends.
“New work has also been won by [the DTM Business Logistics division] for Chep in Victoria and for Air Liquide and BP Castrol Australia,” he writes.
Disruption in Air Liquide’s commercial carbon dioxide production had led to increased demand placed on other producers, meaning greater demand for road and rail transport of the gas, particularly into New South Wales, which was likely to continue.
DTM gained pallet bulk-storage work at its Truganina facility from Chep and movements to NSW and Western Australia continued to grow, as did oil and lubricants distribution from Melbourne to Adelaide for Caltex. Lubricant distribution deals for BP Castrol were also extended.
That good news in southern states extended to steel merchant Australian Reinforcing Company (ARC) cementing volumes for the new Royal Adelaide Hospital and Adelaide Oval redevelopment and a new Bridgestone local transport deal in Victoria and South Australia.
The division also nabbed local transport for Coca Cola in Queensland and Victoria.
Much of this will have necessitated at least part of the extra 25 trucks as part of its fleet replacement program.
The Project Services and Oil and Gas Logistics divisions were in the running for tenders from Chevron, Total, CJV, CKJV and Santos, while an expression of interest process for Woodside Energy had been completed.
While much was made of the Regal Transport arm’s successes in the group’s annual results, Stevenson saw fit to underline the challenges it faced.
“Despite strong customer competition, particularly around Port Hedland and Derby, and labour competition from the mining industry, the general freight division has managed to capitalise on the demand to grow freight volumes,” he notes, mentioning the winning of more work from Coca Cola – linehaul to WA’s north-west in this case.
The K&S Freighters arm has faced much of the downside of the two-speed economy but managed to hold its own with steady volumes from customers and mixed steel sector news.
The silver linings included expected further synergies and improved vehicle utilisation around its new contracted warehouse deal with Laminex at Dardanup, south of Perth.
Meanwhile, related firm Scott Corporation also recently released its annual report.
Though the bulk transport firm’s operational information was not much different from its annual results, it did reveal that $1.65 million was spent on the cash purchase of unlisted Victorian dangerous goods transport firm Allfreight Australia in March.
Johnson, who is also chairman of Scott, says that firm will also keep an eye out for acquisitions but again refused to make a prediction for the future.
The annual report made mention of its safety initiatives, including its Five Star Continuous Improvement Safety Program (CISP 5), the audit team for which includes two drivers nominated by the drivers.
Scott revealed that a survey of another program – Take 2 – Before You Do – which focuses on front line hazard identification, had identified employee backing for a revision.
“Results of the survey overwhelmingly supported a review of the process to include further training display of commitment and the addition of documentation to assist in hazard identification and risk mitigation steps,” the annual report says.
“As well, it was clear that the employees wanted to play and integral role in the design and development of the new Take 2.”