Mountain Industries purchase seen as helping offset softness in other sectors
Investment, integration and cohesion are helping drag Asciano through the hard times, CEO John Mullen has told shareholders.
Along with the diversified transport and logistics company’s rail services coming together as part of the five-year revamp the company is half way through, Mullen underlined opportunities the $84 million purchase of trucking firm Mountain Industries 13 months ago as providing positive outcomes.
“Mountain Industries, which you might recall is a Newcastle-based integrated logistics solutions provider, that acquisition was 100 per cent completed in October; some very good synergy opportunities being worked on with Pacific National and the Ports business across a number of transaction and growth options,” he tells the firm’s annual general meeting.
“Also in 2014, the business and contribution was impacted by first year acquisition costs as well as weakness in export grain volumes and some other bits and pieces, but overall it’s been a very positive addition to the group.”
On the rail side, the arrival five new Chinese-made class-88 locomotives for coal haulage and repowering of NR-class locos and rolling stock will take the load off future capital expenditure, which had risen 25 per cent to $754 million in the past financial year.
“The cap-ex of course continues to reflect a degree of catch up spend from prior under-spending which we have noted in the past, particular around Pacific National Rail and the Terminals business, both of which are going through significant capital upgrade programs,” Mullen says.
The company’s intermodal operations stood up reasonably well, despite a fairly soft domestic economy and Western Australia coming off the boil.
“The Queensland intermodal business is expected to grow in FY15 following the signing of the new agreements and the property acquisitions from Toll and the establishment of our full intermodal business there, and we remain very focused on how we restructure our service platform to ensure that we can take cost out and more productive, but at the same time ensure that service levels go up not down,” Mullen says.