Transport and logistics company, K&S Group, has released a trading performance update.
The company has cited challenging operating conditions across its transport and logistics segments.
Operating revenues for reporting period (the year ended 30 June 2020) was $790.6 million, 12.7 per cent lower than the prior corresponding period.
The group reported a statutory profit after tax of $11.2 million, up 384.1 per cent on the previous year’s statutory profit after tax of $2.3 million.
Included in the group statutory result for FY2020 was $12.4 million (before tax) attributable to JobKeeper and $1.3 million (before tax) in New Zealand wage subsidy, both of which were received in the June 2020 quarter. Offsetting these were a number of other significant items relating to debt refinancing, restructuring and the sale of the WA Regal General Freight business. These items totalled $8.4 million.
After adjusting for the above significant items including government wage subsidies, the FY2020 underlying profit before tax was $12.0 million, an increase of 270.1 per cent on the prior corresponding period. The underlying profit after tax was $8.4 million, up on the prior corresponding period by $6.1 million.
Operating cashflow for the year was $83.1 million, 34.4 per cent higher than for the previous year, which included benefits derived through continued and improved working capital management as well as government wage subsidies.
K&S said the Australian Transport business delivered a strong improvement in results compared to the last year.
Full year revenue declined due to a combination of the cessation of contracts, divestment of underperforming business units and customer activity reduction consequent to Covid-19.
The New Zealand business produced a ‘sound’ result in FY2020, despite the Stage 4 Covid-19 lockdowns in place from 23 March 2020 to 26 April 2020.
The New Zealand business is reported to continue to realise growth through the provision of its integrated and value adding service offering, with further business diversification also being achieved.
The fuel trading business has again provided sound financial results, despite demand softening in the June 2020 quarter consequent to Covid-19. The fuel retailing and wholesaling markets remain dynamic and continue to exhibit high levels of competition.
The company also announced management changes.
Wayne Johnston ceased as Chief Financial Officer on 16 December 2019 and Raunak Parikh was appointed to the position of Chief Financial Officer on 1 April 2020.
As for safety, the Lost Time Injury Frequency Rate across the group decreased from 10.0 in the previous year to 6.6 in the current year.
In addition, the total reportable injury frequency rate reduced by approximately 20 per cent compared to the previous year.
K&S has continued to invest heavily and proactively in load restraint training.
In September 2019, this investment was recognised at the 30th Australian Freight Industry Awards where the group was provided the Investment in People Award.
The application of its revised load restraint training methods provided immediate benefits, with manual handling injury rates declining by approximately 25 per cent during the year.
Included in this report was an overview of K&S’ business operations.
Intermodal operations performed well, particularly on the eastern seaboard.
Asset utilisation further improved in both linehaul road and rail operations.
Intermodal steel and timber volume from K&S’ major customers was strong. Major infrastructure projects undertaken by the various State and Federal governments underpinned these activity levels, and despite the recent decline in domestic housing and apartment construction, are forecast to remain the same in the immediate future.
Full year revenue declined due to a combination of the cessation of contracts, divestment of underperforming business units and customer activity reduction consequent to Covid‐19. The implementation of cost reduction strategies continued across the business, contributing strongly to improved underlying profit.
Meanwhile, the contract logistics business has reportedly continued the previous trend of year-on-year growth with strong performance.
Diversification and expansion into non‐traditional sectors continued, with new contracts being awarded and commenced during the year across the country.
A strong focus on safety, service excellence and differentiation remain core to the business, underpinning the value proposition to customers and establishing long term sustainable partnerships.
The core business provides consistent volume activity and financial returns, underpinned by focussed cost management and fleet utilisation.
Heavy haulage demand was firm throughout the financial year. Fleet upgrades were progressed, with additional assets being added early in FY2021.
While not shielded from the impact of the Covid-19 pandemic, the diversified customer base and industry segments did assist in limiting the direct impact the pandemic has had on the business.
K&S’ chemical and fuel transport business unit has seen steady improvement with a range of restructuring initiatives having reportedly made a positive impact over the course of the year.
Improvements were offset by a fall in volumes, especially in the energy business during the Covid-19 period, as fuel demand declined significantly in the June 2020 quarter.
The group’s aviation refuelling business performed well with strong activity levels in support of regional firefighting efforts. Agriculture support also increased due to better than previous year’s rainfall.
Consequent to Covid‐19, significant volume reductions were experienced in the June 2020 quarter with traffic through many regional airports that we support materially declining.
A new refuelling installation was commissioned at Bathurst Airport in March 2020. Construction of K&S’ largest and most recent installation at Port Hedland International Airport (WA) was commenced, with commissioning currently underway.
The fleet upgrade and expansion program has continued with the company’s firefighting capacity increased further.
The fuel trading business also provided sound financial results despite softening demand.
The fuel retailing and wholesaling markets remain dynamic and continue to exhibit high levels of competition.
K&S’ South Australian regional network was marginally increased with the addition of a new retail shop and service station at Kingston SA.
Ongoing fleet upgrades have enabled K&S to continue its emission improvements. During the year vehicle emissions reduction reached 76 per cent of 2003 levels for NOx, up from 74 per cent, and 93 per cent for particulate matter compared with 91 per cent last year.
Carbon dioxide generation for 2018‐19 was 180,886 tonnes, down from 199,000 tonnes from the previous year.
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