Toll Group’s expected earnings unchanged

Despite a reduction in the goodwill value of its Global Forwarding Division, Toll Group has announced that its earnings predictions are still on track for the current financial year, citing the Group’s diversification within the transport industry as one of its underlying strengths.

The board of Toll Group have decided to announce to the Australian Stock Exchange the writing down of approximately $200 million in the company's earnings guidance for this financial year. Market conditions have deteriorated over the past six months, according to Toll, and this is resulted in lower growth and profit margins than predicted earlier in the year.

“While we still see global forwarding as an attractive market longer term, this impairment decision reflects the combination of current weak market conditions and uncertainty over the timing and extent of any recovery,” said Brian Kruger, Toll Managing Director.

“We are focused on the areas under our control, driving cost reductions and productivity improvements even harder. For the foreseeable future our focus will be on driving costs out of the (forwarding) business and we will not look at further acquisitions in the global forwarding market until we are able to demonstrate improved operating performance in this division.”

Toll has reconfirmed its operating earnings guidance for the 2013 financial year, reflecting the benefits of its diversified earnings base. As stated at its interim results announcement in February, Toll expects its operating earnings for the second half of the 2013 financial year to be higher than the same period last year, resulting in reported operating earnings (EBIT) for 2013 between $420 million and $430 million.

The company said that the announced non-cash impairment will not have an impact on Toll’s ability to fund its capital expenditure programme, or to pay dividends.

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