Toll Holdings shares have taken a hit in the stock market after an earnings downgrade partly related to the performance of its refrigerated linehaul business.
Managing Director Brian Kruger blamed continuing soft retail and global apparel conditions amongst other issues for a likely fall of earnings before interest and tax of $400 million-$420 million this financial year, compared with last year’s $431 million.
By Rob McKay | May 16, 2012
Toll Holdings shares have taken a hit in the stock market after an earnings downgrade partly related to the performance of its refrigerated linehaul business.
Managing Director Brian Kruger blamed continuing soft retail and global apparel conditions, amongst other issues, for a likely fall of earnings before interest and tax of $400 million-$420 million this financial year, compared with last year’s $431 million.
This had been exacerbated by poor performance of overseas firms “and significant margin pressures in the interstate linehaul and warehousing operations of the Toll Refrigerated business”, Kruger says.
The immediate response to the announcement saw more than 12 percent wiped from the value of Toll shares in morning trade.
It was hovering around the $4.90 mark having spent the week between $5.70 and $5.60.
Despite the fall, the price is still up on the $4.31 they garnered at the start of the year.
Meanwhile, Toll will fold its vehicle distribution service, Automotive Australia, into PrixCar, its 50-50 joint venture with K-Line Auto-Logistics, gaining $37 million after tax in the process.
K-Line Auto-Logistics is itself a 50-50 joint-venture between Qube Logistics and Kawasaki Australia.
The move comes “in response to broader automotive industry trends, such as the decline in local manufacturing and the increase in vehicle imports”, Toll says
The cash will partly offset after tax losses of $146 million-$166 million on its Japanese firm, Footwork Express, and $39 million on the carrying value of four Australian sites, including Villawood.
“The review of the intermodal site at Villawood was influence in particular by the impact of the exit of a key customer, BlueScope Steel, following their decision to exit from the expert steel marker, and the Federal Government’s decision to support development of a Government-owned freight hub at Moorebank in south-western Sydney,” Toll says.
The company recently backed the Federal Government on its decision to opt for a larger, government-owned Moorebank intermodal hub, despite business
criticism on that choice over Qube’s more modest but more advanced option.