Toll Holdings says it's yet to see real upturn
Toll Holdings has joined a growing list of companies to highlight that it is yet to experience a noticeable improvement in economic conditions.
This is despite a lift in business confidence after the federal election.
The transport and logistics company told shareholders that it expected underlying pre-tax earnings this financial year to be higher than 2012-13 due to it stripping out costs and getting more out of its businesses.
It posted a 4 per cent rise in earnings before interest and tax to $426 million last financial year.
The company emphasised that the next few months would be crucial to its full-year result. Shares in Toll closed up almost 3 per cent at $5.90, following the earnings update.
Chief executive Brian Kruger said Toll's businesses exposed to the mining sector were under pressure from lower volumes and customers focused on lowering 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 a significant impact on Toll's 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 growth the company through acquisitions.
"While we have wound back on acquisitions, and economic conditions have generally been challenging, we still have exciting growth opportunities to pursue," Mr Kruger said at the annual meeting in Melbourne.
Shareholders questioned the company about the continued underperformance of its global forwarding business and its operations in Japan.
Mr Kruger said Toll had acknowledged that the strategy of growing rapidly through acquisition in global forwarding had not delivered the right outcomes, and the focus was now on reducing its costs, and internal growth.
"We do think it has a bright future within the organisation," he said.