TIL Logistics Group is reporting improved trading across the majority of its divisions with an overall increase in revenue, earnings and profit for the six months to December 31.
Its net profit after tax (NPAT) was $2.7m for the first half financial period compared to a $2.2m net loss for the same period a year prior.
Total income for the period was up 3.2% year-on-year to $181m. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) was up 38% to $32.9m
The company says it has seen a recovery in activity since the April lockdown, particularly in sectors which are important sales areas, including residential construction, infrastructure, food & beverage and agriculture.
“The second quarter also benefitted 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,” the company says.
Sales revenue of $179.2m for the period was “a solid result given the ongoing impact of COVID-19 and supply chain issues impacting some divisions during the period”.
Improved performance came from four of TLL’s five divisions with a slight decrease in the international division. Its three largest divisions (freight, warehousing and bulk liquids) make up 90% of revenue and EBITDA.
The board says it “retains a prudent approach to cash management” and no interim dividend has been declared. A final FY21 dividend will be considered subject to trading conditions and financial performance continuing to improve.
Operating cashflow increased to $27.4m by the end of the half year period, driven by improved trading and effective working capital management. Since period-end, the company has extended the tenure of its bank facilities out to March 31, 2022 with total borrowings of $83.3m and cash and cash equivalents of $18.3m.
Freight
The freight sector delivered a significant improvement in EBITDA, up 57% on the previous period 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 says.
Warehousing and Logistics
The division is benefitting from the investment made into new warehouses over the past three years. EBITDA was up 23% to $12.4m despite port congestion and supply chain disruption impacting on demand in the second quarter. Continuing disruption is expected on supply chains from COVID in 2H21, however, port congestion is expected to ease and improve the flow of containers on and off ports and into warehouses. The business will continue to benefit from the additional capacity provided by the new warehouses.
Bulk Liquids
The increase in EBITDA to $8m was driven by increased volumes over the summer period, a focus on efficiencies and the flow on effect following resolution of commercial matters with a key customer in early FY21. Management continue to work closely with key customers and are well advanced in negotiations with a large customer to secure a long term contract. Fuel volumes in 2H21 are expected to be in line with the first half of the FY21 year, but will take some time to recover to pre-COVID levels, particularly in industries such as tourism and aviation.
Specialist
The specialist division benefitted from the ongoing windfarm project work and the acquisition of Fletcher Construction Asset Hub alongside a new contract to supply heavy transport and logistics services. EBITDA was up 62% on the prior year to $4m despite some sector specific downturns, particularly in non-residential construction and commercial projects. Increasing enquiries and interest in Machinery Moving services are expected to translate into sales in 2H21 and, longer term, the extension to the Tiwai Point Aluminium Smelter has seen increased interest in a number of electricity generation projects that could come on stream in the next two to three years. TLL has specialist skills and experience in this sector, moving bulky and oversize items onto difficult-to-reach sites.
International
The international division had a mixed six months, with a number of clients yet to recover to pre-COVID levels, as well as supply chain headwinds and a downturn in oil and gas exploration. EBITDA was down 7% to $900,000 for the period. A slow and steady recovery is expected throughout the 2021 calendar year, although current port congestion is expected to continue and airfreight to remain a costly option until 2022.
Outlook
The board has confirmed its earlier guidance that EBITDA for FY21 is expected to be at least that of the FY20 post IFRS-16 result of $57.4m.
It says the current environment has demonstrated the benefits of being “a group of scale and diversity”, with the ability to invest into health and 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,” it says.
Shares in TIL jumped around 3% on the half year results, trading at around $1.05 on Tuesday.
