A SLUMP in waste volumes in Victoria and NSW weighed on the December-half performance of debt-laden Transpacific Industries.
The company was forced to continue to rely on asset sales and cost cutting to reduce borrowings, with no underlying pick-up in demand anticipated in the near term.
The December-half net profit rose to $42 million from $16.5 million a year earlier, on revenue of $1.16 billion, up from $1.12 billion. Earnings a share rose to 2¢ from 0.7¢.
A review has resulted in about 200 employees being retrenched, helping to shave $15 million off costs over a full year, with $3 million of these savings expected to be realised in the second half.
During the December half, net proceeds from divestments totalled $10 million, and since then a further $15 million has been raised from property sales and the divestment of the Australian and New Zealand metals manufacturing businesses.
In Australia, landfill volumes slumped 24 per cent, with a 55 per cent dive in NSW alone, which had a significant impact on margins.
The decline reflects the downturn in manufacturing in NSW and Victoria, coupled with Queensland's decision to remove its waste levy, which has resulted in rubbish being dumped over the border from NSW.
Even though Transpacific has a landfill near Ipswich in southern Queensland, it was initially unable to accept any of the waste from NSW but the opening of a new cell at Ipswich has changed that.
Transpacific is targeting paying down debt by $10 million a month, with the aim of cutting the interest bill by $25 million over the year to June, with further asset sales to help achieve this target.
Transpacific shares rallied a sharp 13 per cent to close at 90¢, just off the day's high of 91¢, and the highest level since early November when dumped on a profit warning.
At that time a decline in first-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of 6 per cent pushed the shares from 90¢ to below 70¢ in a matter of days.
Transpacific told the market on Friday that December-half EBITDA was down a more modest 3 per cent, and that it was making steady gains in whittling down debt.
"The operational performance of our waste management businesses is disappointing and we need to improve our performance markedly," the chief executive, Kevin Campbell, said.
"We expect market conditions in the second half to remain similar to those experienced in the first half."