Resources downturn drives K&S Corporation profit down 44%
Decline in revenue was offset by revenue from recently acquired businesses and contracts
K&S Corporation’s profit before tax and significant items for the first half of 2016 is $5.1 million, 44 per cent lower than its previous first half.
Its interim dividend was also hit – 1.5 cents per share compared to 2014’s 3.5 cents per share.
The company blames the drop on a severe downturn in economic conditions and a steady decline in the resources sector, particularly in its Western Australian operations.
The downturn in the resources sector also affected the company’s east coast operations, coupled with a structural decline in manufacturing.
While the operating revenue was down 1.4 per cent to $355.1 million, the decline was offset by revenue from recently acquired business including NTFS and Aero Refuellers and other new contracts.
"The recent acquisition of Aero Refuellers has provided the opportunity to expand our current transport and fuel operations into the aviation sector and is complementary to our exiting service offering and skill-sets," the company says.
"The integration of the Scott Corporation business has continued to provide synergies and our New Zealand business has sustained a strong performance."
The company directors are hopeful that the business will be in a position for long-term growth under improving economic conditions.
"Cost reduction strategies have continued to be implemented across the business, including the rationalisation and replacement of specified fleet, employee reductions and IT solutions introduced to improve customer service, operational efficiencies and cost reduction initiatives.
"There have also been significant property lease cost reductions through new transport facilities at Hazelmere, the integration of the NTFS and K&S Freighters facilities at Port Adelaide, and most recently vacating the externally rented DTM Victorian warehouse facility now operating through our Truganina facility."