MaxiTrans looks ahead amid favourable turn of fortune


Trailermaker back in black and outlining plans for future gains

MaxiTrans looks ahead amid favourable turn of fortune
MaxiTrans' look inside its new Carole Park facility

 

Illustrating a better-than-expected Covid-19 recovery in its half-year results, a host of further growth initiatives now beckon for MaxiTrans.

Back in black, with its order book pages turning and new Carole Park facility operational, the trailermaker is outlining a new Sydney ‘click and collect’ site, e-commerce network and possible MaxiParts acquistions.

The combined trailer and parts arms’ sales of $184.6 million was up 12.9 per cent on the prior corresponding period (pcp), due primarily to stronger revenue in the second quarter across the trailer market, the company cites.

Reported net profit after tax (NPAT) was $5.7m, a 139.5 per cent turnaround on the pcp.

Trailer solutions revenue of $126.9 million was an increase of 21.4 per cent over the pcp, with MaxiTrans noting a stronger market driven by an increase in the food and grocery sector due to Covid-19.

"Annual buying plans being brought forward by some customers, a strong agricultural sector with a good grain season due to favourable weather conditions and the general freight market was strong compared to the depressed levels in the pcp," the company observes.

"The improved profitability of the division was driven by volume and product mix, including manufacturing recoveries, along with continued improvement in manufacturing operating and quality performance measures and the realisation of benefits of the overhead reductions implemented throughout FY20 extending through to H1 FY21 profit performance."

MaxiParts’ revenue of $68.6 million was 1.3 per cent ahead of an already strong pre-Covid-19 comparative period, "representing a quicker recovery from the Covid-19 revenue challenges than expected".

"MaxiParts continues to become a more diverse business and better able to produce consistent results through various market cycles.

"MaxiParts represents 31.8 per cent of the group’s total revenue, down from 36.2 per cent in the pcp (pcp represented a depressed end market for the Trailers CGU and a strong comparative period for the MaxiParts division)."

Further highlighting cashflow and debt reduction efforts, operating cashflow for the half closed at $21.6 million and a closing net cash position of $2.8 million, an improvement of $14.9 million on the net debt balance of $12.1m at June 30, 2020 and an improvement of $32.9 million on the last 12 months from $30.2 million net debt at December 31, 2019.

Some $4.6 million of that included JobKeeper support from the Australian government.

"The operating cashflows included favourable timing in the Trailers CGU, with customer payments received in advance of $3.3m and a low holding of inventory stock at reporting date due to the increase in demand for both new, stocked and used trailers over the period."

The company remains cautiously optimistic in 2021, noting a strong order bank at the end of the last calendar year, particularly for the trailers arm, which is up nearly 300 per cent on the pcp, "and this has continued to increase in the first 6 weeks of H2 FY21".


How MaxiTrans orders were on the up despite an annual loss, here


Despite this, "the Trailers business strong order bank is currently constrained by the ability to recruit and train the appropriate trades and labour to fulfil the current orders.

"Management’s immediate focus is on recruiting appropriately skilled labour to increase production at all key manufacturing sites however, equally as important, management will maintain a strong focus on ensuring that the growth is balanced with maintaining production efficiency and quality metrics and therefore maintaining the margin of the business."

Organic growth initiatives also include accelerated plans to add a second site in Sydney as a ‘click and collect’ outlet, to go operational late in the calendar year, and a new e-commerce platform set later in the financial year.

Strategic growth sees a re-initiated mergers and acquistions strategy for MaxiParts.

Meanwhile, the recently completed Queensland Carole Park facility "is expected to deliver greater capacity to support our Queensland and NSW customers as we head into FY22, which will also provide benefit in improved margins without the one-off start up related costs that were incurred during FY21".

Stress on the global supply chain due to the pandemic, particularly Europe and North America, may continue to see challenges in product supply becoming more pronounced.

"In addition to the supply chain risk profile, substantial cost inflation in freight and steel is very likely to see the group process market price increases through both the Trailers and MaxiParts businesses sometime in the second half of this year."

 

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