Toll weathers a string of natural disasters and tough economic conditions to post $294.8 million profit
By <a href="mailto:bgardner@acpmagazines.com.au“>Brad Gardner | August 25, 2011
Toll has weathered a string of natural disasters and tough economic conditions to land key contracts across its divisions and post a $294.8 million profit.
The transport and logistics firm’s financial results, released today, reveal a 3.7 percent climb in net profit despite earthquakes, floods and heavy rain buffeting domestic and international operations.
Toll’s mining, energy and marine divisions felt the impact of events such as the Queensland floods and an extended monsoon season in Indonesia, while the earthquakes in Japan and New Zealand weakened trading conditions.
Cyclone Yasi in Far North Queensland reduced freight volumes and forced Toll’s refrigerated division to relocate, while the company’s domestic forwarding and freight operations grappled with a soft retail sector, tight margins and aggressive competition.
“This is a very credible result for Toll in what has been a very challenging global economic environment. This has been exacerbated by a number of tragic natural disasters,” Managing Director Paul Little says.
“We have continued to make good progress in growing our range of businesses despite the weak conditions affecting a number of our operations.”
Toll managed to keep major contracts with Woolworths, Coles and Coca Cola in NSW and Queensland, with its In2store division securing new work with Kmart, Centrelink and Rio Tinto.
Toll Intermodal landed deals with big-name companies such as Fosters, BHP Billiton and BlueScope, while the global forwarding division increased its presence in the US and Europe with a number of retail contracts.
“Important non retail business was also secured with Motorola and Caterpillar,” Toll says.
Little says Toll is focused on increasing its presence in the resources sector on the back of its takeover of Mitchell Corporation.
“The acquisition provides a strong base for Toll Mining Services in the Western Australian resources market complementing operations in other states and creating opportunities for other Toll businesses,” the company says.
“Toll Mining Services also continued to invest in new equipment and technology which assisted in securing new contracts at Wesfarmers’ Curragh Mine, and additional business with Anglo American, Xstrata Coal and Orica.”
Little, who will step down as Managing Director in January next year, says there are “very encouraging” growth opportunities in the mining and oil and gas sectors and that key contracts will underpin long-term earnings growth.
Freedom Freightlines owner Sam Burgess told SCR’s sister title ATN Toll and Linfox’s foray into the West Australian mining sector has increased competition and forced down rates by as much as $1,500 on some runs.
“Because Toll and Linfox are fighting over work, we get what’s left over and the money is just not there anymore,” Burgess says.
Toll says it is beginning to see the benefits of its 2010 takeover of Concord Park, which was integrated into the Toll Express division. It says revenue has grown and margins “have now stabilised and the Concord Park business is now contributing well to Toll Express”.
While saying the outlook is hard to predict, Little believes conditions for Toll have stabilised. As well as increasing its presence in the resources sector, Toll plans on growing its global forwarding operations and improving the performance of its Japanese-based Footwork Express.
“We have a strong competitive position in the Australian market, which we remain focussed on, while also increasing our involvement in the logistics tasks associated with the fast growing online sector of the retail market,” Little says.