Toll reports increased sales revenue

Toll Group, one of Asian region’s leading provider of integrated logistics, reported sales revenue of A$8.2 billion for the year ended 30 June 2011, up 18% on the prior year. Total operating profit (EBIT) was A$436 million, up 7%. Net profit after tax was A$295 million, up 4%.

Commenting on the result, Mr Paul Little AO, Managing Director of Toll said, “This is a very credible result for Toll in what has been a very challenging global economic environment. This has been exacerbated by a number of tragic natural disasters. Importantly for Toll, despite the terrible loss of life in a number of these natural disasters, our people are safe. I am extremely proud of how our people have responded, both within their communities, and in their business units, allowing Toll to continue to meet customer expectations and to assist in critical relief efforts.

“We have continued to make good progress in growing our range of businesses despite the weak conditions affecting a number of our operations. We have benefited from both acquisitions and organic growth, while also being affected by macro-economic conditions.

“Toll Global Resources has made great progress in the past year, although second half earnings were depressed by weather related issues across a number of its businesses. Growth opportunities arising from both the mining and oil and gas sectors are very encouraging with a number of key contract wins to support long term earnings growth. The acquisition of Mitchells in Western Australia provides another avenue to participate in growth in the Mining sector. The Singapore Supply Base (TOPS) is progressing well and is on track to be completed during FY13.

“Toll Global Logistics saw revenue growth with excellent results from its Australian businesses in2store and Contract Logistics, and its South/Southeast Asian region. Reduced special project work from the Singapore Government contracts and the sale of Pacorini Toll negatively affected comparisons to the prior year. Automotive logistics was particularly impacted by the difficult economic conditions in Australia.

“Toll Global Forwarding has continued to follow its strategic growth path, having completed a number of bolt-on acquisitions during the year. Despite global market conditions remaining challenging, good growth in revenue was achieved, including 5% organic growth. Investment to increase our management capability to underpin future growth has negatively impacted the performance of the business in the short term as it is positioning itself for its’ targeted scale. The roll out of new IT systems currently underway will enhance service levels and improve yield.”

“Toll Global Express had an excellent result in Australia with Toll Priority and Toll IPEC both performing very well. Underlying earnings at Footwork Express in Japan was a small loss, with its reported earnings boosted by a number of one off gains.

“Toll Domestic Forwarding increased revenue despite the negative affect of natural disasters together with the closure of the PaperlinX paper mills in Tasmania and the associated loss of volume for the high fixed cost Toll Shipping business. Strong cost control partially offset the earnings impact of these events. Exposure to the soft retail sector, combined with aggressive competition in the market negatively impacted margins.

“Overall, the Group generated operating cash flow of A$651 million, and invested A$507 million in capital expenditure, including A$89 million on the TOPS redevelopment in Singapore. In addition, we invested A$328 million in expanding the Group through acquisition. Our balance sheet remains strong with net debt to net debt plus equity at 26.7%. We completed our refinancing program in July, extending our maturity profile and reducing funding costs. This ensures we have sufficient balance sheet capacity for acquisitions and planned capital expenditure.

“A final fully franked dividend of 13.5 cents per share will be paid to shareholders on 10 October 2011.

“The outlook is challenging to predict, although generally we would say that conditions look to have stabilised, at least for Toll. We will continue to focus on our strategic growth path, achieving the necessary scale in Toll Global Forwarding, incrementally improving the performance of Footwork Express in Japan and continuing to grow our exposure to the strong resources sector. We have a strong competitive position in the Australian market, which we remain focussed on, while also increasing our involvement in the logistics tasks associated with the fast growing online sector of the retail market.

“Lastly I would like to congratulate Brian Kruger on his selection as the next Managing Director of Toll. I am very pleased to be able to hand over control of the great company that I believe Toll is, to such a capable executive. Brian is a great fit for Toll at this stage in its development and I look forward with interest to see where he leads the company.”

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