MaxiTrans remains in red with interim results

Trailer-maker warns of coming coronavirus impact as it ploughs through heavy weather

MaxiTrans remains in red with interim results
MaxiTrans is doing it tough at present


The market has gone frigid on MaxiTrans, with the listed trailer-maker noting in its half-year results that a significant contraction in the external market leading to a decline in trailer order intake.

General economic conditions have continued to be challenging for the firm over recent months.

"These general conditions have contributed to a rapid slowing of new trailer registrations in MaxiTrans’ addressable market over the second half of calendar year 2019, which looks set to remain at low levels for at least the first half of calendar year 2020," it says in its interim report.

And while coronavirus still appears to be a crisis average Australians seem to believe is only health-related and almost entirely elsewhere, the company is much less sanguine about the broader impact but more confident on disruption to its business.

"The Covid-19 virus is a risk to the Group due to the effect it will likely have on the broader economy," it says.

"The Australian supply chain for manufacturing trailers has a strong local manufacturing footprint which is expected to mitigate any significant supply chain risk.

"The New Zealand manufacturing supply chain is under review to source more items locally to mitigate its reliance on overseas parts sourcing.

"The MaxiParts supply chain is carrying sufficient inventory to provide an internal buffer that counters current delays in overseas supply."

Read about MaxiTrans chairman Robert Wylie’s company pledge, here

Sales of $163.5 million was down 14.3 per cent on the prior corresponding period (pcp), or down 11.8 per cent on pcp when excluding discontinued operations, due primarily to weaker trading conditions in the first half across the trailer market.

Reported net loss after tax (NPAT) was actually a loss of $14.4 million compared with a pcp profit of $1 million.

"The market conditions have affected the trailer business’ key products with bulk unit volumes (agriculture and construction) down 40 per cent and general freight unit volumes (consumer / customer confidence) down 20 per cent," the company says.

MaxiParts’ revenue declined marginally by $1.3 million over pcp to $67.7 million with a larger than expected decline in the underlying market offset by fleet customer growth and organic growth of new product lines.

"The decline in the profit from the underlying market of $1.6m represents margin pressure in the market driven by the inability to pass on all inventory costs increases to customers," the company says

"To offset the pressure on underlying market, sales and profitability was improved via an increase in volume from the growth initiatives of selling integrated MaxiTrans solution to fleet customers and new product introduction through the retail network of $0.6 million, coupled with overhead savings of $0.9 million

The Trailer Solutions revenue fell $26 million, or 19.9 per cent, to $104.6 million, "broadly in-line with the overall decline in the addressable market".

"Profitability was impacted by both reduced volume and mix of ($3.3m) as well as reduced manufacturing recoveries of ($4.1m)," the company states.

"The volume impacts was offset through improved manufacturing efficiency and rework of $0.9 million, reduction in overhead costs of $2 million as well as improved underlying margin of $0.9 million.

"The Trout River acquisition contributed $0.5 million."

In the face of intractable conditions, MaxiTrans is looking to control what it can.

"To offset the external market decline, the Group has continued to drive improved efficiencies in manufacturing processes," it states.

"In addition, the Group has implemented a number of cost savings initiatives, including staff redundancies, which have reduced operating costs by an annualised $10.6m, $2.2m of which has been realised in H1 FY20."


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