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Toll Holdings profit falls by 76%


Transport and logistics group Toll Holdings says its priority in the current financial year will be to resolve problems in its business in Japan and its marine shipping operations in Asia.

Toll on Monday booked a 77 per cent fall in full year profit due to writedowns on some assets in Australia and Japan.

Net profit in the year to June 30, 2012 was $64.6 million, down from $281.4 million in the prior year.

The bottom-line result was pulled back by $203 million in impairments related to Toll Express Japan (Footwork Express) and Toll's properties in Australia.

Net profit excluding one-off items was $274.2 million, down 5.8 per cent from $291.1 million in the prior year.

Toll said its businesses had a mixed performance amid challenging market conditions.

Toll shares were five cents lower at $4.50 at 1250 AEST on Monday.

It said economic conditions in Japan were challenging, with subdued levels of industrial production and consumer spending.

There was a low likelihood of near-term economic recovery in Japan.

Toll said its Marine Asia business had experienced difficult trading conditions in 2011/12, with an oversupply of vessels in the Indonesian marine freight market affecting charter prices, and poor vessel utilisation hurting earnings.

Toll managing director Brian Kruger said neither Footwork Express nor Toll Marine Asia were delivering acceptable returns, and turnarounds for both of them were problematic.

Toll was reviewing each business.

"The number-one priority for us in this coming 12 months is to resolve the issues around Footwork and Toll Marine in Asia," Mr Kruger said during a market briefing.

"While they're not big loss-makers, and we're still working on improving their bottom lines, the outcomes of the reviews for Toll Japan and Marine Asia will be absolutely key to improving the overall returns for the group."

Asked if the Footwork and Marine Asia businesses had gotten any worse, Mr Kruger said: "If anything, Marine Asia has probably got a bit tougher and Footwork maybe has improved a touch."

Mr Kruger said Toll needed to get more out of its existing businesses.

Some of Toll's manufacturing and discretionary retail customers were doing okay, but the overall market in those sectors remained tough.

Toll also had to deal with increasing labour, property and other cost increases.

But there was a strong pipeline of opportunities in the resources sector.

Mr Kruger also said Toll had not experienced any tapering off of activity arising from the resources boom.

"We've still got a very strong pipeline of opportunities both in the bulk mining sector in Queensland, in Western Australia, the gas developments off the coast of Queensland, off the coast of Western Australia, off the coast of the Northern Territory," he said.

Toll said that in 2011/12 its global forwarding division continued to face challenging markets.

Volumes were affected by a shift of customers from airfreight to oceanfreight.

On group outlook, Toll said it did not expect any short-term improvement in external conditions, but recent new contract wins and ongoing investment in fleet, property and IT would support future earnings growth.