Market Overview

TIL Logistics Reports Big Full Year Revenues But Small Profits

TIL Logistics Reports Big Full Year Revenues But Small Profits

Trucking, freight and international forwarding business TIL Logistics (NZX: TLL) of New Zealand has reported solid revenues of NZ$355.1 million (US$226.94) and a small net profit after tax of NZD$4 million (US$2.56 million). The group also reported a slowdown in the second half of the financial year.

The 2018-2019 financial year is TIL's first full year as a publicly-listed group after it undertook a reverse-listing in December 2017.

Commenting on the results, the CEO of TIL, Alan Pearson, commented: "FY19 was a year of business growth with expanded capacity, new business acquisitions and wins and organic growth. A significant focus for management was the continuing amalgamation of TIL's brands and businesses into a cohesive group organisation".

New Zealand's financial year runs from July to June. The New Zealand dollar is worth about US$0.64 at the time of writing.

TIL Logistics Group

TIL Logistics is headquartered at New Plymouth, a small city on the western coast of the North Island of New Zealand. Founded in 1869, in New Plymouth, the company was subject to a management buyout in 1989 and undertook a radical growth by acquisition program. Many of the bought-companies have retained their original brand identities. In December 2017, the group achieved a reverse-listing on the New Zealand Stock Exchange through Bethunes Investments.

The group has at least 16 sub-companies and brands offering a wide range of services organised into four divisions, namely, freight (road), tankers (bulk liquids and dangerous goods), warehousing and international.

Collectively, the corporate group offers a wide range of services including courier, air and sea freight, custom clearance work, port services, ship husbandry, crew matters, tank cleaning, ship's agency, general road freight, project cargo road freight, storage, warehousing and a wide range of other freight related services.

Sales and revenues performance

TIL's overall revenues were NZ$355.1 million for the 12 months ended June 2019 (the reporting period), which is a rise of 9.1 percent compared to the 12 months to the end of June 2018 (the prior period).

Revenue gains were made across all divisions. However, freight, warehousing and logistics, and bulk liquids were the main revenue generators providing about 94 percent of sales earnings.

It was a financial year of two halves, however.

"Good first half growth, with revenue gains partially offset by unplanned cost impacts in the second half of the year and a slowdown in 4Q19," the company said in a statement.

TIL's freight business was said to have a good first half but experienced "softer demand" in the second half of the year. It experienced a four percent upswing to NZ$149.2 million.

The group's "specialist" division (project, heavy lift and oversized cargo transport) earned NZ$13.1 million. This was driven primarily by revenues generated from the acquisition of a specialised lifting and haulage company in November last year that delivered additional revenues of NZ$11.8 million.

Bulk liquids racked up a solid NZ$78.1 million primarily because of the renewal of two key customer contracts. The bulk liquids group also produced revenue gains "despite a strong prior year that included one off revenue gains from … pipeline disruption," the group added.

The international division earned NZ$8.0 million, owing, in part, to increased activity in the oil and gas sector. The group describes its international division as "niche" but with "growth potential". The group says it is exploring acquisition possibilities in this division.

Finally, the warehousing and logistics division earned NZ$106.7 million, recording "strong growth" as additional capacity came online in the second half of the year.

Costs and profits

TIL racked up total operating expenses of NZ$348.8 million in the reporting period, a rise of about 3.4 percent on the prior period. The biggest chunk of the company's costs were accounted for by transport costs of NZ$147.7 million (about 42.4 percent of the total). These include road user charges, fuel, tyres, repairs and maintenance, owner-driver and subcontractor costs.

The other main chunk of cost was employee costs of about NZ$127.3 million (about 36.5 percent of the total). This is typically composed of wages, salaries and pension fund contributions.

TIL's costs have increased owing to a generally higher-cost environment, the group said. These include the costs of being a listed company, along with fluctuating fuel prices, road user charges, regional fuel taxes, increases in wages and higher costs for parts and equipment. Growth has brought costs too with increased property rental costs, higher fleet-lease costs, setting up a senior leadership team, and higher repair and maintenance costs.

The annual report stated that earnings before interest tax depreciation and amortisation increased from NZ$6.9 million to NZ$28.0 million. Net profit after tax swung from minus NZ$11.66 million to a profit of NZ$4.4 million.

Source: TIL Logistics annual report 2019


TIL is expecting improved performance in the current financial year (2019-2020) because of new customer contracts, additional warehousing capacity, organic growth and the arrival of benefits from investment made in the 2018-2019 financial years.

The group expects high demand to continue in several sectors such as food, rural, and construction.

The group also expects to make further acquisitions in the coming financial year.

"The transport and logistics sector remains fragmented and TIL is well positioned to build both organically and through carefully selected acquisitions. Opportunities have been identified across all sectors to improve volumes and utilisation, expand the offer and drive efficiencies," the group said.

Image Sourced from Pixabay

Posted-In: Freight Freightwaves LogisticsEarnings News Global Markets General


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