Higher fuel prices and operating margins as well as some maintenance issues have impacted the transport sector, but overall earnings remain solid.
TIL Logistics Group has posted a $4 million net profit after tax for its first full half year report as a publicly listed company.
Total sales revenue was $175.2m, total income $177.6m, and earnings before interest, tax, depreciation and amortisation was $14.1m for the six months to December 31.
Highlights for the period include the renewal of two significant customer contracts with Z Energy and Farmlands, acquisition of Specialised Lifting and Transport Group (SLTG), the establishment of the senior leadership team, investment in new warehouse capacity and continued business growth.
Sales revenue and total income continued to trend upwards, with particularly strong sales performances from freighting and warehousing and logistics due to high pre-Christmas demand for both transport and warehousing across New Zealand, the company says.
A two-month contribution was received from SLTG following its acquisition in November 2018, which included the usual seasonal slowdown in December.
Higher operating costs have continued into the current financial year with higher fuel prices, road user charges and regional fuel taxes, increased wage costs and higher costs for parts and equipment due to the lower exchange rate.
TIL has offset some of the higher fuel costs through a supply contract with Z Energy as part of the renewed strategic partnership.
Increased property rent costs, wages and fleet lease costs have also been felt by the company.
TIL is also leasing more trucks rather than buying them, which has seen lease costs increase, and is benefiting from the establishment of an expanded senior leadership team during the period.
However, TIL says its well positioned with growing demand for professional transport and logistics solutions.
Smaller acquisitions are under consideration and TIL is investing in five new warehousing facilities to meet future demand.
One warehouse at Tauranga opened at the start of December 2018 while two more warehouses in Christchurch and Auckland will open from April 2019, with a further two by the end of 2019.
The company has also identified growth opportunities in international freight forwarding, and non-fuel bulk liquid haulage.
Second half performance is expected to be in line with the first half.
The company confirms FY19 guidance to be EBITDA of $28m to $32m and NPAT of $7.8m to $8.8m, taking into account the higher operating and corporate cost base, the investment into new warehouses and a partial year contribution from new acquisitions.
TIL chief executive Alan Pearson says customers are “increasingly demanding a transport and logistics partner who can provide a safe and sustainable New Zealand-wide transport, storage and metro delivery service”.
Freightways has reported net profit after tax of $33.4m, up 6.3% for its half year result.
Total revenue is up 7.7% to $314.8m for the six months to December 31 compared to $292.1m for the same period the previous year.
Earnings before interest, taxes, and amortisation (EBITA) was up 5.8% for the period to $52.1m.The result was boosted $1.4m from an insurance payout replacing earthquake-damaged racking in the firm’s Wellington storage facility.
The express package and business mail division saw operating revenue of $233.5m, up 7.8% from the previous period.EBITA of $38.6 million was up 6.1%.
This division includes New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, SUB60, Security Express, Kiwi Express, Stuck, Pass The Parcel, DX Mail and Dataprint.
Looking ahead, New Zealand and Australian markets remain positive, the company says.
The business to customer transport market is expected to grow within the express package and business mail division and higher prices are expected.
“The inflationary cost of operating in a tight labour market, along with a generally higher cost of doing business, is expected to be offset by increased pricing, including pricing related to higher fuel costs.
Freightways will continue to monitor employment law reform,” the company says.
Tourism Holdings Limited (THL) has reported a 23% decline in first half net profit to $17.5m after a “challenging” vehicle sales market in the USA.
The tourism and campervan rental and sales company saw revenue up 6% to $144.3m for the six months to December 31.
However, vehicle sales revenue declined 14% to $62.9m compared with $73.1m in the same period last year.This was due to USA vehicle sales under-performance.
The company is forecasting a full year net profit after tax of around $32m.
THL’s half-owned joint venture with Action Manufacturing saw a 67% decline in earnings as part of anticipated losses from the acquisition of truck body and trailer manufacturer Fairfax Industries.
The investment in the global TH2 digital joint venture with Thor Industries, which is based in North America, incurred losses in line with expectations.
THL chief executive Grant Webster says returns and profit continue to “improve in the core business and we see ongoing opportunities for improvements in our operating model.
“While there is some uncertainty about the growth rate for international tourism, we are currently still experiencing growth in forward bookings in all markets,” Webster says.
Meanwhile, Refining NZ’s full maintenance shutdown has significantly impacted net profit after tax (NPAT), down 62% to $29.6m for its full year results 2018.
Its previous year’s NPAT was $78.5m for the 12 months to December 31.Revenue was down 13% to $359.6m compared to $411.m the previous year.
The Marsden Point-based company started the shutdown in late April last year with major work on refinery processing units and related equipment.
It was the first full shutdown of the plant in 14 years.
The company is the country’s only oil refinery and produces around 70% of the petrol, diesel and jet fuel used in New Zealand.
It is 43% owned by Z Energy, BP and Mobil, and charges those customers processing fees based on refining margins in Singapore.
Refining NZ chief executive Mike Fuge says the impact on earnings was partially mitigated in the second half by healthy refining margins, a weakening exchange rate and a strong operational performance.
“While the NPAT result was impacted by the planned maintenance shutdown in April-June the reliable running on processing units for the remainder of the year saw refinery throughput for the second half of 2018 at its highest ever, which allowed the company to capitalise on healthy refining margins,” he says.
The gross refining margin averaged US$6.31 for the year (compared to US$8.02 per barrel in 2017) or US$7.33 when normalised for the 2018 shutdown.
This is at the top of its historical US$4 to US$6 per barrel range.
Refining margins have softened since the beginning of 2019, Fuge says.
The full refinery shutdown took longer than expected to complete due to refurbishment of key units.
Problems were reported at the time with the hydrocracker unit following a weld failure on a newly installed OEM isolation valve.
There was also an incident involving leaks from the unit.
Fuge says there were a lot of learnings which the shutdown team can apply to any future maintenance shutdowns.
The major refurbishing of the refinery’s hydrogen manufacturing unit was a major achievement, he says.
“As New Zealand’s largest producer of pure hydrogen this refurbishment underpins the refinery’s role in the fuels supply chain and presents the exciting possibility of developing further hydrogen infrastructure which is critical to our low carbon economy, and to New Zealand continuing to meet its climate change obligations,” Fuge says.
The next smaller scale maintenance shutdown is planned for 2020.
The company expects to lift operational performance further and achieve a throughput of around 44 million barrels for the 2019 year.
