Monday 25th February 2019
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TIL Logistics says first-half operating earnings were about 1 percent lower than a year earlier, reflecting higher fuel costs, wages and road-user charges.
The trucking firm reported earnings before interest, tax, depreciation and amortisation of $14.1 million for the six months through December. That was down from $14.2 million a year earlier, excluding $21.3 million of non-trading costs related to its reverse NZX-listing in October 2017.
Sales rose 7 percent to $175.2 million, but net profit fell to $4 million from an adjusted $5.6 million profit in the same period a year earlier. TIL noted that corporate costs in the latest period were about $1.1 million higher than a year earlier, reflecting a full six months as a listed company, increased governance costs and an expanded leadership team.
The New Plymouth-based company reiterated its forecast for full-year operating earnings of $28-to-$32 million and noted that the higher operating costs seen in the December half have continued into 2019. They are also rising faster than consumer price inflation.
“Changes in the operating environment have seen higher fuel prices, road user charges and regional fuel taxes, increased wage costs and higher costs for parts and equipment due to the lower exchange rate. TIL has offset some of the higher fuel costs through a supply contract with Z Energy as part of the renewed strategic partnership."
TIL noted that some of the higher costs reflect the group’s on-going expansion, particularly the expansion of its warehousing facilities and the higher property costs that have flown from that.
“TIL is also leasing more trucks rather than buying them, which has seen lease costs increase, and is benefiting from the establishment of an expanded senior leadership team during the period including the creation of new CEO, CIO and Group HR roles.”
The company said it remained confident in its strategy and will pay a 2.5 cent dividend on March 27.
TIL shares were unchanged at $1.45. They have fallen about 27 percent the past year.
TIL has more than 900 trucks and operates depots and warehouses in 60 locations. Its Pacific fuel business is one of the country’s largest tanker fleets, while its general freight business includes major brands like TNL, Hooker Pacific and Roadstar.
Chief executive Alan Pearson noted the renewal of the company’s contracts with Z Energy and Farmlands, and the November purchase of Specialised Lifting and Transport Group, as significant events during the period.
The firm also opened its new Tauranga warehouse in December and will open new facilities in Auckland and Christchurch in April, with two more in those centres later in 2019.
“Our bundled transport and logistics offer is now starting to show dividends, and our market share is growing, with a number of new customers and increasing demand from existing customers,” he said.
“With our scale, reach, and depth of experience, we can work our assets and networks more efficiently and manage our costs. We have the financial strength to expand by acquisition where it adds long term value and we remain focused on growing our existing businesses.”
The firm’s freight division, which accounted for about 43 percent of group revenue, delivered the biggest improvement. Revenue increased by 5 percent to $76.4 million, while ebitda jumped 67 percent to $4.9 million.
Earnings from warehousing and logistics, the second-biggest contributor to revenue, fell 7 percent to $5 million. Revenue rose 9 percent to $52.8 million.
TIL says the result was below expectations due to bottlenecks at Ports of Auckland during the period that had slowed the flow of goods to Christchurch. NZL Group’s new warehouse in Tauranga opened two months behind schedule and that firm had also suffered from the closure of a major customer in late 2017.
Earnings at the bulk liquids arm, the third-largest contributor to group revenue, fell 27 percent to $4 million, despite a 3 percent lift in sales to $38.9 million.
Pearson said the firm incurred higher costs to support the renewed contracts with Z Energy and Farmlands, while first-quarter volumes had also been lower due to high fuel prices. Fewer trucks were sold in the latest period than a year earlier, and the increased number of leased tankers in the fleet had also resulted in higher lease costs.
The specialist and international arms each delivered just over $3 million in revenue and $500,000 and $700,000 of ebitda respectively.
Pearson said the uplift in activity in the oil and gas sector had been good for the international business. He also noted an “emerging opportunity” for the specialist division on renewed wind farm development.
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