Move Logistics Group has axed its proposed New Zealand coastal shipping plans due to “vessel design limitations” while its trans-Tasman service has also run into problems.
The company revealed the updates at its 2023 annual shareholders’ meeting held in Christchurch on Wednesday.
The dual-listed transport firm was among four preferred suppliers in the Government’s $30 million coastal shipping fund announced in May last year.
Move was set to receive $10 million of co-investment from Waka Kotahi NZ Transport Agency to help accelerate its coastal shipping strategy aimed to offer “blue-water alternatives to trucking”.
In September 2022, the company announced procurement plans for a new “green” roll-on, roll-off (RORO) methanol-capable vessel which was hoped to be available for use by November this year.
A final design was underway but the vessel could not meet essential requirements so it was scrapped, chief executive Craig Evans told shareholders.
“Essential to this strategy was that the new vessel was capable of loading and unloading cargo at smaller, regional ports and in a variety of weather and tidal conditions.
“Some critical design limitations have been identified and we have now been advised that a suitable vessel cannot be designed that meets our essential requirements,” Evans said.
Instead, Move’s oceans division will focus on its trans-Tasman service “for the short to medium term”, he said.
Mechanical problems
However, the trans-Tasman service was also experiencing difficulties with its newly acquired vessel, the Atlas Wind, out of action due to mechanical failure.
It acquired the ship out of Europe and it can carry 366 containers, or the equivalent of 5000 tonnes of bulk cargo.
The service commenced in January this year and completed more than eight round trips between Australia and New Zealand before breaking down and needing to be towed to port for repairs.
“We expect a significant portion of the cost to be covered by insurance and have chartered a vessel to ensure service continuity is maintained,” Evans said.
Meanwhile, the firm’s international division, while small, provides “valuable freight forwarding and shipping agency services” through a number of joint ventures and partnerships, he said.
“In the current economic climate, we have seen some reduction in demand for these services.”
Share price down
In August, Move reported a net loss after tax of $7.2 million for its full-year result with a “soft performance” from its freight business.
Total revenue was $347.7m for the year to June 30, down 4.5% compared to $364m the previous year.
Normalised EBITDA was $47.4m. Its net loss was extended following a loss of $4.2m the year prior.
It has seen the company’s share price fall more than 40% over the past 12 months to a 52 week low of 61 cents per share.
Move chair Lorraine Witten acknowledged the performance and promised shareholders the company was working on long term growth.
“Like many of you, we are unhappy with where the share price is today and see our biggest impact will be by focussing on current financial performance and building the future business.”
Witten said the past 18 months have been tough with the business impacted by the global recession, cost inflation and the unwinding of product stockpiles as the global supply chain returned to normal.
“We also faced driver shortages and increasing wage pressure until the restrictive Covid immigration rules were relaxed.
“This meant a business climate in FY23 where revenue was muted and expenses rose, which combined resulted in lower profit.
“We focused on retaining profitable customers, keeping our team in place so we could deliver for customers, and reducing costs where possible.
“At the same time, we have kept up our investment on those foundational projects important for the future, such as our investment in digital platforms,” Witten said.
During shareholder questions, the board was asked if the current share price puts the company at risk of a takeover bid.
Witten said there was always risk of a takeover if shares are undervalued.
“We’ve had no whiff of anything like that so there’s nothing to report in that regard but we would be ready should that circumstance eventuate.”
Meanwhile, following the appointment of Evans as chief executive in February, an in-depth business review was conducted.
Lifting performance
In late FY23, Move embarked on ‘Project Blueprint’ – a 12 to 18 month programme to reshape and strengthen the business, and drive organic growth.
It aims to support future growth ambitions, with a more efficient, higher margin business model and focus on the company’s core strengths.
Move says it’s focused on organic growth, through customer acquisition and a focus on building base volumes while allowing capacity for higher margin business.
Following a review, its specialist and lifting business was reintegrated into the group after a strong year following Covid impacts in FY22. This was a backtrack on previous plans to sell the business in order to focus on freight and contract logistics operations.
However, the company says the specialist division is “a high performing business which delivers robust margins”. Revenue from the operation was up 32% to $18.7m and EBITDA up 132% to $4.3m.
