K&S reflects on chequered operational outcomes

Shifting focus sees opportunities in less-traditional sectors such as agriculture

K&S reflects on chequered operational outcomes
Fuel transport had a difficult year


Freeing itself of Western Australian general freight has eased the pressure on K&S Corporation’s shareholders while allowing the company focus on its heavy haulage business in the state, chairman Tony Johnson has told the company’s annual general meeting.

The diversified transport and logistics enterprise had seen a strong western exposure earlier in the decade, during the mining and resources boom, as an antidote to weak eastern state performance, and it has not abandoned the state.

"After considering various options in relation to Regal General Freight, the Board elected to undertake this transaction [to Centurion] to realise improved shareholder returns and provide ongoing certainty to the Regal General Freight employees and customers," Johnson says.

And he adds: "Pleasingly, through working capital improvements and reduced capital expenditure requirements following the sale of the Regal General Freight business, our bank debt levels have reduced since June and further improvements are expected over the course of this financial year pending finalisation of the disposal of excess equipment in Western Australia."

MD and CEO Paul Sarant reiterates the ranges of positives and negatives noted in the annual results, noting general freight, certain regions in the fuel and chemical transport sectors that the company  services and inconsistency with the Port Kembla South32 coal volumes, the contract for which is winding down.

Against that, the New Zealand business and the company’s contract logistics division, DTM, "performed strongly", K&S fuels agency business "performed well" and eastern state road linehaul operations had "a solid year".

Interestingly, K&S is busy in the agricultural front, "with new contracts awarded and commenced in the year in South East QLD, South Australia and the northern regions of Victoria."

Read how the last financial year panned out for K&S, here

The company suffered network impacts from rail firm Aurizon’s withdrawal from intermodal operations in 2017.

The upshot of that has been an Aurizon payment of $25 million and transfer ownership of 65 rail containers to K&S without admission of liability.

"Despite major network changes occurring consequent to Aurizon exiting the intermodal market, our rail transport operation has been able to consolidate and meet customer service expectations," Sarrant says.

"Our intermodal business has incurred ongoing annual increased pre‐tax costs of approximately $6.4 million following the closure of Aurizon’s intermodal business."

The annual results announcement mentions a slight safety reversal during the year with Lost Time Injury Frequency Rate (LIFTR) up from nine to 10.

This has spurred a new effort to haul that back.

"In the last financial year, approximately 3,000 units of training were delivered through our induction and refresher training program," Sarant reports.

"The company continues to invest heavily in many key HS&E initiatives, including the handling of chemicals, load restraint training, and driver in‐cab assessments.

"Our fleet telemetric monitoring costs supporting our COR obligations now exceed $1 million per annum.

"We have taken steps to formulate and introduce a mental health program across the business.

"During the year we continued to expand our drug and alcohol testing program. This testing is randomly applied to all categories of workers."

K&S also sees progress on emissions.

"Cognisant that our current fleet is substantially larger than it was 16 years ago, our annual total vehicle NOx emissions were 69 per cent of 2003 levels and 7 per cent down on FY18," Sarrant states.

"Carbon dioxide generation for 2018‐19 was 181,000 tonnes, down from 199,000 tonnes the previous year."


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