Maxitrans profits plunge but revenues hold up

Trailers bear brunt of difficult economic conditions in rural and mining markets


An insight into the difficult reality for many manufacturers can be seen in the first half of the financial year for MaxiTrans.

But, like many in similar positions, the trailer and parts firm is accentuating the positive, an effort aided by the relatively minor reversal in revenue along with a diversification move.

Compared with the previous first half, net profits were down 51 per cent to $5.3 million but revenues fell only 5 per cent from $181 million to $172 million, with that pain felt mostly in the trailer division.

"The continued decline in trailer demand due to weak economic conditions has intensified pricing pressure with heavy discounting significantly impacting margins in order to retain sales volume," the company says.

Always partially exposed to the elements, the tipper markets took a 33 per cent revenue hit, especially in the first quarter, "due to the severe drought throughout most of Queensland and northern NSW, reduction in resources activity and continued low infrastructure activity nationally".

On the positive side, the firm pushed on with opening its own-brand trailer dealership in NSW and the trailer arm’s unit sales were up 3 per cent compared with the previous first half.

The MaxiParts arm took hits from the downturn in Queensland that was shared by Azmeb, $784,000 in costs related to greenfield sites in Mackay and Darwin and an $850,000 product recall. It will look to relaunch the CS suspension range and move to a larger Victorian warehouse in April.

With domestic business in the doldrums, New Zealand and China supplied the silver lining, with revenue rises of 90 per cent and 25 per cent respectively, due to due to improved sales volume and favourable product mix in the former and a new production facility now fully operational in the latter.

Amongst those likely to gain from a weaker dollar, MaxiTrans is surely high on the list and a breaking drought in Queensland can only aid the bottom line down the track.

"Overall, we continue to see subdued business confidence in the Australian economy which is reflected in our current trailer order book and outlook for the Parts business," the company says.

"However, with recent widespread rains across southern Queensland, we have seen improved tipper enquiry.

"The declining Australian dollar and increasing local product customisation should also see local manufacturers positioned well as against import competition.

"As a result of the outlook, the company is currently reviewing its manufacturing strategy and footprint to ensure its facilities are utilised to obtain optimum efficiency given the current market conditions.

"Together with the realisation of efficiencies from the manufacturing continuous improvement program, the Australian trailer business is focusing on opportunities in new markets, including the waste transfer sector, to mitigate the decline in the resources sector and also aggressively pursuing new customers to increase market share."

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