Toll focuses on costs as it awaits upturn
Toll Holdings has joined a growing list of companies revealing they are yet to experience a noticeable improvement in economic conditions despite a post-election lift in business confidence.
The transport and logistics group told shareholders it expects pre-tax earnings this financial year to be higher than those for 2012-13 due to its stripping out of costs. It posted a 4 per cent rise in earnings before interest and tax to $426 million last financial year.
Its shares rose almost 3 per cent to $5.90 after the earnings update.
Chief executive Brian Kruger said Toll's businesses exposed to the mining sector were under pressure from lower volumes as customers lowered their own costs.
"Ongoing softness in discretionary retail is also keeping pressure on a number of our businesses," he said. "While it is clear that we are yet to see a measurable improvement in the general economic environment, we are generally tracking where we expected to be at this time of the year."
The downturn in the resources sector had an impact on the mining services business in the second half of 2012-13, and Toll has stepped up cost-cutting in the division.
Under Mr Kruger, Toll has adopted a strategy of focusing on building its existing businesses, in a departure from the game plan of his predecessor, Paul Little, to grow the company through acquisitions.
Shareholders at the company's annual meeting questioned the under-performance of its global forwarding business and its operations in Japan.
Mr Kruger said Toll had acknowledged the strategy of growing rapidly via acquisition in global forwarding had not delivered the right outcomes, and the focus was now on reducing its costs, and on internal growth. "[But] we do think it has a bright future within the organisation," he said.
He also offered rare positive news for Toll's Japanese freight business, formerly known as Footwork Express, by citing signs of a small improvement in Japan's economy.