Toll Group's FY2011/12 profit falls 6pc on tougher market conditions

AUSTRALIA's Toll Group has announced full year net profit, excluding non-recurring items, of A$274 million (US$283.75 million) for the 2011/12 financial year ending June 30, representing a decrease of six per cent year on year.

Non-recurring items (net of tax) amounted to A$203.3 million. Including these non-recurring items, net profit after tax amounted to A$70.9 million.

Total operating profit (EBIT) was also down six per cent year on year to A$411 million on sales revenue of A$8.7 billion, up six per cent on the previous year.

Commenting on the results, the company said: "Strong returns in its traditional businesses" allowed the group to "continue to pursue sustainable growth opportunities". The company invested A$479 million in capital expenditure, including A$56 million on the TOPS redevelopment in Singapore. Total debt rose to A$1.71 billion, up from A$1.51 billion in the 2010/11 financial year.

Toll Group managing director Brian Kruger said he was pleased with overall performance given difficult market conditions, and praised the group's disciplined approach that resulted in "outstanding second half cash conversion, and the continued strength of its balance sheet". Operating cash flow was up 7.1 per cent to A$673.4 million.

"An increased focus on returns across our six divisions, and our strong financial position mean Toll is well placed to continue to pursue opportunities for sustainable growth," Mr Kruger said.

Its global logistics division posted full-year total EBITA of A$92.6 million, up 2.3 per cent; global forwarding A$20.6 million, down 39.2 per cent; global express A$131.2 million, down 22.8 per cent; domestic forwarding A$56.7 million, down 7.5 per cent; and specialised and domestic freight A$87.7 million, up 21.6 per cent compared to the previous year.

"Toll global logistics retained key customers and achieved new customer wins while also seeing the benefits of a recovery in earnings from its automotive logistics business.

"The Toll global forwarding division continued to face challenging markets but has made good progress on internal productivity initiatives.

"Toll global express continued to deliver strong returns from its Australian businesses despite soft markets in some areas, and also launched its new B2C parcel delivery service to help capitalise on the growing 'e-tail' purchases market. A strategic review of the Japan express business continues.

"Toll domestic forwarding managed to produce a solid underlying result despite flat industry-wide volumes. Recovery in its Tasmanian shipping business was largely offset by losses in its Australian refrigerated interstate line haul and warehousing operations, which were sold in July.

"And we saw a strong result for our Toll specialised and domestic freight division, with growth in revenue, earnings and returns generated by increased resource sector activity, contract wins and cost improvement programmes," said Mr Kruger.

Looking ahead, he said: "While we don't expect any short term improvement in external conditions, recent new contract wins combined with our on-going investment in fleet, property and IT will help us support future earnings growth."