Toll defies bust to reap more profit, signalling its hunger for consolidating the transport market has returned
By Jason Whittaker | August 27, 2009
Toll Holdings has defied the bust to reap more profit from its transport and supply chain assets, with the company signalling its hunger for consolidating the market has returned.
Australia’s largest logistics provider returns to profit after selling out of assets like airline Virgin Blue, announcing a 14 percent increase for continuing operations of $298 million for the 12 months to June.
The company booked more than $6.4 billion worth of revenue for the period, up 16 percent on the 2008 result.
Managing Director Paul Little says it’s a strong result and positions the company for more mergers and acquisitions.
“We are continuing to see real opportunities for acquisitions which match our long-term strategic vision,” he says.
“We see some very interesting future growth options both here in the region and around the world.”
Toll credits cost control for keeping margins low in its Australian and Asian businesses, though lower volumes hit its global forwarding division particularly hard.
It records underlying revenue growth in Australia at 1.3 percent (1.6 percent in Asia), reflecting increased competition and “a general slowdown in economic activity”.
DOMESTIC MARKET STRONG
Toll made $4.8 billion from its Australian and New Zealand operations last year, up 4.7 percent on the previous period.
“The strength of the Australian and New Zealand operations was a highlight and a tribute to the integrated model the group has been championing for many years,” Little says.
Toll added a number of new acquisitions to the domestic business last year, including Perkins Shipping and Extra Transport which Little calls “important additions” to the company.
“The integration of last year’s acquisitions including Golden Riverland, Couriers Australia, Victoria Express, Skynet and Westrans was another highlight,” Little says.
In Asia, the company had contract wins with Coca-Cola in China and Nestle in Singapore and Thailand.
Little says the company’s involvement in the fast-moving consumer goods market “cushioned” the impact of the global economic downturn across China, India, Singapore and Vietnam.
“However, significant volume reductions were experienced in the consumer electronics, automotive and industrial sectors,” he says.
Toll also added freight forwarders BALtrans and Gluck to its network last year, but the global forwarding business felt the full brunt of the economic collapse.
But Little says the division has poached a number of key personnel from DHL, UPS, Exel and Kuehne and Nagel and the business is forecast to triple its revenue base to $3 billion by 2012.
Little says trading conditions in the short-term will remain “generally flat” with “some improvement” evidence across Australia and Asia.
“Toll is, however, well positioned to benefit from improvement in economic activity,” he says.
“Significant investment is being made for future growth in projects such as the TOPS Loyang offshore supply base and continued investment in fleet and technology.
“The acquisition outlook remains very positive with opportunities in most sectors, particularly global forwarding. Our strong balance sheet position leaves us well placed to take advantage of opportunities as they arise.”