Toll has offloaded its refrigerated division to the owners of Rand Refrigerated Logistics for $6.5 million
July 5, 2012
Toll has cut loose one of its loss-making divisions, announcing the interstate line-haul and warehousing operations of Toll Refrigerated will be sold to the owners of Rand Refrigerated Logistics.
Automotive Holdings Group has agreed to purchase Toll Refrigerated for $6.5 million to bolster Rand’s service offering, with the deal tipped to be finalised by July 30.
Toll is in the process of reviewing its operations, and Managing Director Brian Kruger felt the best move was to sell Toll Refrigerated, which the company says made a small operating loss last financial year. A spokesman for the company declined to divulge the exact figure, but the Macquarie Group estimates the loss at less than $5 million.
“Due to the challenging market conditions and margin pressure faced by this business, we concluded that, in this case, divestment was the best option,” Kruger says.
“It is encouraging that we have been able to complete the review and conclude a positive result for both parties in such a short period of time.”
Toll says its interstate line-haul and consolidated warehousing operations have revenues of around $75 million. About 100 employees will transfer to Rand as part of the sale.
Toll will still offer refrigerated services where Rand does not operate, such as far north Queensland and Tasmania.
The multi-million dollar deal does not include Toll Refrigerated cold storage facilities in Sydney, Brisbane and Perth. However, Automotive Group Holdings says it will lease some of the facilities in the short term while it integrates the business with Rand.
Automotive Holdings Group says the similarities between Rand and Toll Refrigerated will allow the business to “generate incremental growth” and develop cost synergies.
AHG Managing Director Bronte Howson says the acquisition will result in greater utilisation of Rand’s existing equipment and help the company reduce empty and part-load movements across the network.
“For Rand, savings can be made by improved utilisation of its existing cold storage facilities and transport services,” Howson says.
“TR’s [Toll Refrigerated] existing customers will benefit from being part of a significantly larger refrigerated business with a quality reputation in the market.”
Kruger has previously announced Toll had been reviewing some of its businesses since May.
In an interview with The Australian newspaper earlier this week, Kruger said he expected the review to be completed by the end of 2012.
The business is chiefly concerned with its struggling Footwork Express division in Japan and Toll Marine Logistics Asia.
The spokesman for Toll says the company regularly reviews the performance of its businesses.
“The conclusion of the Toll Refrigerated review, and its outcome, is unrelated to the progress of any of the other reviews currently taking place,” the spokesman says.
“We are well aware of our disclosure obligations and should we have something material to announce we would do so.”
