TIL Logistics Group & Freightways show good results
Posted: 25-Feb-2021 |

Two of NZ’s Publicly listed Transport companies show good returns.

New Zealand freight and logistics company, TIL Logistics Group Limited (NZX: TLL), has reported an increase in Group revenue, earnings and profit for the six months to 31 December 2020 (1H21) as it benefits from improved trading across the majority of its divisions.

The company has seen a recovery in activity since the April lockdown, particularly in sectors which are important sales areas for TLL, including residential construction, infrastructure, food & beverage and agriculture. The second quarter also benefited as pressure on coastal shipping and capacity at Ports led to an increase in demand for road transport, although this was partially offset by a reduction in demand for warehousing during this time.

Sales revenue of $179.2m was up on the prior year, a solid result given the ongoing impact of COVID-19 and supply chain issues impacting some divisions during the period.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) increased 38% to $32.9m with an improved performance from four of TLL’s five divisions and a slight decrease in the International division.

The company reported a return to profitability, with a Net Profit After Tax of $2.7m, up from a loss of $2.2m in the prior comparative period (pcp). NPAT includes a $(1.3)m non-cash impact of NZ IFRS-16 Accounting for Leases.

TIL Freight - The Freight sector delivered a significant improvement in EBITDA, up 57% on pcp to $9.3m. The first six months of the freight improvement plan have now been completed, with early benefits being seen in operational efficiency, customer interaction and back office administration. Other transport modes continue to be adopted as part of customer solutions, with strong demand for road and rail, particularly during the Christmas period.

TIL Outlook - The current environment has demonstrated the benefits of being a group of scale and diversity, with the ability to invest into health & safety, training, systems and infrastructure.

While economic conditions remain volatile, private and public investment, as well as consumer demand, is expected to drive demand in certain sectors.

The company will continue to focus on strategic priorities in the second half of the financial year, being the Freight improvement plan, organic growth, targeted acquisition opportunities, Group synergies and growing shareholder value.

Freightways - Half Year Results to 31 Dec 2020 and Interim Dividend

Directors say that Freightways is a resilient and entrepreneurial business. This has been demonstrated through the most disruptive challenge we have seen in recent times. The ability for our teams to respond to the pandemic and safely provide essential services has been illustrated over the last 9 months through initiatives such as: the swift establishment of a temporary international airfreight service for NZ exporters from scratch; providing high levels of service despite the rapid acceleration of express package and medical waste volumes; growing our contractors’ incomes far in excess of normal wage growth; and maintaining a workforce of 5,000 people pre and post the initial lockdowns.

Through a combination of organic growth and new-customer acquisition, as well as a very focused control of costs, we have delivered results that we are very proud of. The performance of our new acquisition, Big Chill, has also been very strong and has resulted in an increase of $19.2m in the accrual for the final payment of the purchase price (part of the contracted arrangement provided for a final payment which would be reflective of performance post purchase). This impacts our reported NPAT for the half year.

As we head into 2021, we are conscious that we operate in a carbon emitting industry (by virtue of the vehicles and aircraft we operate either directly or through contracts) and that operating sustainably is critical for the future of our environment. While we have made great strides in reducing our relative emissions per item through optimisation of the routes and size of our fleets and adopting modern vehicles, we also continue to monitor alternative fuel cell vehicle development that will eventually allow us and our contractors to achieve step changes in carbon reduction. Key to this will be to ensure our contractors are in a position to switch from diesel to alternative fuel cell technology. Within our Secure Destruction business we are investing in our ability to grow circular economy initiatives - through our ability to pick-up, process and deliver high-value waste. From an efficient platform (document destruction where we already divert 50,000 tonnes of paper fibre from landfill), we are adding new high-value waste streams to be repurposed and recycled. We intend to use the power of our networks to pick-up, process (shredding, treating) and deliver to those who demand the end product - reliably and efficiently.

Through the latter half of 2020 we have been encouraged by growing eCommerce demand fuelling greater express package volume. This will help our industry grow profitably for those who can meet its challenges. We are also excited by the emphasis on waste reduction and increased sustainability initiatives which our destruction business can leverage.

Freightways is well positioned to take advantage of the opportunities that are in front of us with loyal customers, high-performing businesses, a strong balance sheet as well as experienced and adaptable teams. We will return to paying a dividend in April 2021 based on the strong performance of the business in the first half of FY21.

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