Market Overview

MaxiTRANS Dumps Chinese Panel Supplier and Buys Trout River


Melbourne-based MaxiTRANS, an Australian manufacturer and supplier of trailers and road transport equipment, has bought a local trailer manufacturer. It has also disposed of its majority shareholding in a panel-making business in China.

Australian Stock Exchange listed MaxiTRANS recently announced that it had agreed to acquire Trout River Australia, a manufacturer of live bottom trailers. As the name suggests, a live bottom trailer has a conveyor belt at the bottom of the trailer. It is used for carrying bulk cargoes such as aggregates. Trout River states that live bottom trailers are safer than tippers because they are inherently more stable and can discharge under low structures, on uneven ground and under power lines.

Trout River manufactures a range of trailers including tri-axle semis, tandem semis and rigid units. Available attachments include chip spreaders, diffusers, side conveyors, shoulder chutes, spreaders, water tanks and other specialised equipment. Both trailers and attachments come in a variety of sizes and custom options are also possible.

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MaxiTRANS reported that it paid A$5.9 million for 80 percent of Trout River's equity and the remaining 20 percent is subject to an earn-out arrangement. The former owners of Trout River, John Surwillo and Neil Lehman, will join the MaxiTRANS group to help smooth the transition to new ownership. Trout River had approximately A$10 million in annual sales in the 2018 financial year and had Earnings Before Interest Taxation Depreciation and Amortisation (EBITDA) of A$2 million.

The acquirer expects its purchase to be earnings accretive in the next financial year. Commenting on the benefits of the acquisition, MaxiTRANS said in a statement that the addition of live bottom trailers will add products that appeal to the construction sector to its portfolio. Increased sales are expected as live bottom trailers can now be sold through the MaxiTRANS national dealer network. Production and efficiency gains may be realised as the existing Trout River business can now access a variety of the buyer's systems, procurement and engineering expertise.

In other MaxiTrans news, the company announced in early December that it had sold an 80 percent stake in Chinese panel manufacturing business MTC. The sale raised A$7.7 million (US$5.46 million). The company had earlier said in its October 2018 annual report to shareholders that it intended to sell the Chinese panels business owing to poor returns on invested capital because of a commoditisation of that market. The company therefore decided to divest and redeploy the capital. The company confirmed, however, that it remained committed to geographic expansion in southeast Asia and China.

In October this year, MaxiTRANS reported A$409.3 million of revenues, EBITDA of A$21 million, and net profit after tax of just over A$10 million. The company added that its trailer division contributed 74 percent of its revenues and 68 percent of its profits. One of its other major businesses, the supply of truck and trailer parts, contributed 26 percent of revenues and 32 percent of profits.

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