Privatisation to push toll's growth - Freight Forwarding - transport operator Toll Holdings - Brief Article

Business Asia, March, 2002

AUSTRALIA'S LARGEST transport operator Toll Holdings recently announced a 52 per cent increase in earnings before interest and tax for the last six months of 2001.

The announcement, made in February, follows hot on the heels of the company's recent acquirement, in partnership with Lang Corporation, of the National Rail Corporation and Freightcorp.

The $1.2 billion privatisation, finalised last month, significantly enhances Toll's integrated logistics offering.

Toll managing director Paul Little said the successful bid was an obvious highlight for the company.

"It positions Toll to offer Australian industry with a unique integrated logistics service and will provide the next generation of growth for the company," Little said.

Previously, the rail company was owned 70 per cent by Federal Government, 20 per cent by the NSW Government and 10 per cent by Victoria.

The three-way ownership was reported to be fraught with bureaucratic conflicts, so it was decided to sell the network to the private sector.

More than five years after this decision was made, Toll and Lang bought the network.

Moving forward, the plan is to grow the rail network, which Little says is already an integral part of the company's strategic direction.

As well as the rail network, Toll also attributes its favourable financial performance to strong organic growth across the business.

"The execution of major new contracts and improving profitability of the Finemore businesses acquired less than 12 months ago have clearly boosted the current result and are underpinning future growth," says Little.

Revenue from operations in the six months to December 2001 grew to just over $1 billion, an increase of 41 per cent.

EBIT grew to $57.5 million, compared to the previous corresponding period of $37.9 million, while profit after tax increased 45 per cent to $39.2 million.

Little drew particular attention to the continued margin growth, with the EBIT margin of 5.6 per cent representing an 8 per cent increase.

"The improvement in EBIT margin reflects our focus on achieving cost efficiencies throughout the company, together with a targeted capital expenditure program," Little said.

He added the record result was achieved in a very competitive industry environment, and economic conditions have remained stable throughout most industry sectors.