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MaxiTrans records three-figure rise in profits

Trailer maker hopes uncertainty leading to short-term customer investment caution will end soon

August 27, 2013

MaxiTrans is doing a great deal right beyond just sales, if its annual results are anything to go by.

The trailers, bodies and equipment company has posted a 111 per cent rise in net profits for the financial year to $26 million but this came on the back of a proportionally modest rise in revenues of 31 per cent to $363 million.

After being in the red five years ago, net profits have displayed exponential growth, especially in the last two years.

However, as with the road haulage industry, its immediate future depends on how the economy performs after the federal election, with uncertainty leading to short-term customer investment caution.

“Performance of the trailer business in Australia will be largely dependent on the continuation of investment in the resources, rural and the housing and construction sectors,” the company says.

“Should we see activity and capital investment in these sectors improve after the Australian federal election, we expect this to have a positive impact on the trailer business.

“Good rains and minimal grain reserves in the agriculture sector should have a positive impact on first half [2013-14] tipper performance.

“We will also be directing increased sales effort into diversifying into overseas markets, with a particular focus on developing economies.

“We expect a strong contribution from the Parts & Service business over the outlook period as we seek opportunities to service new markets.

“To this end, we will be opening a greenfield MaxiParts store in Mackay, northern Queensland, and will be actively investigating other locations.”

Queensland Diesel Spares (QDS) was integrated into the Parts & Service business and the Azmeb Global Trailers business into the Trailer arm.

The integration of QDS drove the increased contribution of the Parts & Service business to the overall result.

The acquisition in October 2012 of 80 per cent of South Australian trailer dealer Transport Connection also contributed.

MaxiTrans laid responsibility for the success on realising a four-point plan:

  • identifying strategic acquisitions that complement the current business model and integrating them successfully
  • increasing the relative contribution of the Parts & Service business so as to provide greater overall earnings sustainability and stability;
  • optimising manufacturing efficiency by the rationalisation of the manufacturing footprint in Australia and focusing on improved utilisation across all manufacturing facilities
  • diversifying industry sector and international penetration.

The $6.3 million acquisition of Azmeb has enabled the Trailer business to gain greater exposure to the resources and waste management sectors and provided a product offering which can be expanded into global markets, the group says.

The integration of QDS, which cost $27.2 million, saw external revenue for the Parts & Service business grow 40 per cent to $127.6 million including the realisation of synergies.

A of 27 per cent increase in unit sales enabled the firm to “realise significant efficiencies, resulting in enhanced margins for the overall business”.

“Demand for Freighter products was typically broad based, with strong orders from a number of large fleets and also from the resources sector which continued to drive trailer sales in FY13, especially in the first half, and influenced the change in model mix to favour open semi-trailers and road trains over curtain siders,” the company adds.

“Skeletal demand remained strong supported by growth in container movements. Demand for curtain siders also grew in the second half of FY13, particularly down the eastern seaboard of Australia, with total Freighter unit sales growing by 31 per cent over the prior year.”

Maxi-Cube refrigerated and dry freight vans recorded a unit sales rise of 8 per cent.

The tippers segment encountered difficulties, however, with low rains affecting agricultural sector demand early in the financial year.

The Azmeb acquisition in May 2012 drove a 36 per cent increase in tipper sales but they were affected by slower activity in the housing and construction sector.

“This acquisition has increased MaxiTans’ exposure to the resources and waste management sectors, with a highly reputable and stable product range,” the group says.

“There was good demand for Lusty EMS high-capacity off-road mine haulage side tippers and conventional tippers but this was offset by slower demand from the construction sector.”

The distribution of Hamelex White tippers was strengthened by the appointment of the group’s Queensland Freighter and Maxi-CUBE dealer, Trailer Sales, as the sole Queensland distributor.

Previously, Trailer Sales, which is 37 per cent owned by MaxiTrans and reported a net profit rise of more than a third to $4.2 million, only had the distribution rights for Hamelex White tippers in North Queensland.

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