TIL Logistics is providing an earnings guidance of between $25 million to $27m for its FY20 result and says its businesses are recovering since the lifting of COVID-19 restrictions.
The EBITDA guidance for the financial year to June 30 is down on the prior comparative period (FY19) of $28m, but ahead of the March 2020 guidance of $23-$24m EBITDA before it was withdrawn at the beginning of the lockdown period.
A number of TIL Logistics’ operations continued as essential services during the lockdown, however the company says all divisions were adversely affected by COVID-19.
It implemented a number of measures during this time, including:
- The Government wage subsidy allowed for TIL Logistics to retain and pay over 1500 employees at least 80% of their wages.
- Increased focus on efficient use of the fleet.
- The directors reduced their fees by 25% and the executive team reduced their salaries by 20% during alert level 4.
- TIL received support from some landlords and its asset leasing partner during the period. TIL also worked closely with its customers to offer them support where possible.
- TIL’s level of essential service trading and recovery since lockdown, combined with the wage subsidy, provided the liquidity required to trade through the alert levels 2-4.
The company says cashflow and cost control remains a priority and all non-essential operating expenditure and capital expenditure is being reviewed.
FY20 initiatives to drive group performance include:
- Initiatives to lift the performance of the freight division with a stronger management and operational structure and an increased focus on sales and marketing functions. A new executive general manager has been appointed and is leading the turnaround plan for the freight division.
- Technology remains a key focus, with final testing of the new transport management system now complete and to be rolled out over the next few months, which is expected to further enhance the efficient use of the fleet.
- Recent procurement initiatives are expected to deliver long term cost benefits.
- Strengthening of the executive team with a number of new appointments over the last year.
- Continuing focus on sustainability with investment into new electric forklifts, green building standards for new warehouses, and ongoing partnership with Hiringa Energy around hydrogen fuel solutions.
- In March 2020, TIL acquired the outstanding shareholding in the ATL joint venture. This will further enhance the freighting opportunities within Central Otago and provide a more streamlined service for customers and suppliers, with financial benefits being recognised in TIL Logistics’ consolidated trading performance.
- Performance from MOVE’s expanded warehousing business remains solid, but with less stock movements over the COVID-19 lockdown period.
Operating outlook
The company says it remains positive about the future but the flow-on effects of COVID-19 “will be felt for some time and the company retains a cautious outlook on the economy and the trading environment”.
“TIL should be better placed than many other businesses in the ‘new normal’, with strong brands and a diverse customer base across multiple sectors, some of which have been seeing strong performance levels, such as in the aquaculture, viticulture and other primary industries, however the speed of the recovery in the construction, retail and energy sectors remains uncertain.
“The current environment has demonstrated the benefits of being a group of scale, with the ability to invest into health & safety, training, systems and infrastructure. TIL Logistics is well positioned to take advantage of opportunities within the sector,” it says.
