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TIL lifts operating earnings, watching for slowdown

By Gavin Evans

Aug. 23 (BusinessDesk) - TIL Logistics says it is watching business confidence and the broader economy closely after noting a slowdown in the June quarter.

The trucking and warehousing business reported 7 percent growth in adjusted full-year operating earnings today on the back of its expanding freight operation and growth of its specialist trucking operations.

But it noted that second-half revenue at the freighting division – its largest revenue producer – fell below that of the first-half to end the year 4 percent ahead. Second-half revenue from all the other divisions was up on the first-half and the year-earlier period.

TIL says it is expecting an improved performance in the current year driven by organic growth and a full-year contribution from the Specialist Lifting and Transport Group it acquired in November.

While it is “watching business confidence and the economy closely” it expects the economy to continue expanding in line with current rates of about 2 percent.

“Continuing high demand from food, rural, building and construction sectors,” will support the firm’s growth, it said.

TIL shares rose 5.7 percent to $1.30 on very light volumes, trimming their loss so far this year to 13 percent.

New Plymouth-based 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 NZL Group.

Excluding non-trading cost related to its 2017 listing, earnings before interest, tax, depreciation and amortisation in the year to June 30 rose 7 percent to $28 million – the bottom of guidance provided last month.

Sales revenue increased 9 percent to $355.1 million, with the expanded specialist division accounting for more than a third of the increase.

The company reported a net profit of $4 million. Excluding a $2.6 million provision for additional consideration on its 2017 purchase of MOVE Logistics, adjusted net profit was $6.6 million, down from $7.1 million the year before.

TIL will pay a 2.5 cent dividend on Sept. 27 to shareholders registered on Sept. 13, as previously signalled.

The biggest contributors to the earnings improvement were the general freight business and the specialist transport division, which had exceeded high expectations, TIL said.

Earnings from the warehousing division fell to $9.1 million, 5 percent less than the year before, due to the loss of a major customer, costs from relocating to new warehouses and costs from splitting the NZL business into separate warehousing and freighting services.

Bulk liquids earnings fell 20 percent to $8.3 million, in–part due to costs supporting renewed contracts with Z Energy and Farmlands. High fuel prices had reduced consumer demand and the division also earned less from truck sales.

The company said it sees “significant opportunity” in trucking non-fuel liquids for the food, chemical and industrial sectors and has rebranded as Pacific Liquid Logistics as part of that wider strategy.

The specialist division contributed $2.6 million of ebitda, from a $400,000 loss the year before.

TIL said it sees “significant” opportunity to increase its share of the heavy and oversize freight market. It was won new contracts for planned wind farm developments and says the current year looks promising for the division with a number of major projects being considered.

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