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Paul Little upbeat despite Toll's 16 per cent profit dive


Toll Holdings recorded an EBIT of $224.1 million compared to $266.4 million in the previous period, a decrease of 16%. Revenue for the 6 months was $3.3 billion, a decrease of 6% over the previous corresponding period revenue of $3.5 billion. Despite this result, managing director Paul Little was upbeat about the company’s prospects.
 
The company reported that its half year result confirmed revenue has recovered from the lows of the first quarter, and that it expects this trend to continue over the remainder of the year.
 
“This has been one of the toughest trading environments for the logistics sector in many years,” said Toll Group managing director Paul Little.
 
“Toll, however, has maintained its market leadership in the strategically important Australian market and is extremely well placed to benefit from a return to more normal global trading conditions.
 
“For the interim period under review, revenue fell six per cent as our major customers traded down on the previous year.
 
“Much of the revenue shortfall generated a disproportionate impact on EBIT as our key express networks were unable to completely defray the impact of revenue shrinkage.
 
“As volumes return, however, these higher yielding businesses will move quickly to higher levels of profitability.
 
“A pleasing element of these results is the strength of our EBIT margins across the group, which remain well above industry standards,” Mr Little said.
 
“I am also pleased to report that the disciplined cost controls that have long been associated with Toll Group remain in place and our balance sheet remains strong with plenty of scope for further M&A activity as opportunities present.”
 
Recent acquisitions include Footwork Express in Japan, Summit in the US, LDS in the Middle East and Express in New Zealand.
 
“Each of these acquisitions positions us well for growth throughout the rest of the year and beyond. The strategy we have been following for several years now is continuing to come together well and while volumes are down in some sectors, it is certainly a good time for companies with strong balance sheets to be pursuing acquisitions.
 
“While some of Toll’s businesses fell short of their half-year targets, volumes now appear to be improving and the company is well placed to take advantage of anticipated more buoyant economic levels,” Mr Little said.
 
Financial results
 
Toll Holdings recorded an EBIT for the group, before acquisition amortisation charges and Footwork Express re-measurement charge, of $224.1 million compared to $266.4 million in the previous period, a decrease of 16%.
 
Revenue for the six months was $3.3 billion, a decrease of 6% over the previous corresponding period revenue of $3.5 billion.
 
Revenues across the Group were lower, reflecting the impact of the Global Financial Crisis in the markets in which the company participates. Reported revenues for Toll Global Logistics and Toll Global Forwarding were also impacted negatively by currency translation due to the strengthening of the Australian dollar against the Singapore and Hong Kong dollars. These negative impacts were partially offset by the addition of newly acquired businesses and new contract wins. In addition, the Group continued its focus on strong cost management and a disciplined approach to maintaining EBIT margins across the business.
 
Profit after tax for the six months to 31 December 2009, before the Footwork re-measurement charge of $37.4 million, was $147.3 million, a 16% decrease over the previous corresponding period of $176.3 million.
 
Operating cash flow after capital expenditure for the six months of $82 million was lower as a result of lower cash profits and higher capital expenditure that reflected the company’s ongoing investment in growth.

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