In the Toll half year report, released this week, Toll look set to turnover the same amount of revenue as in the previous year with a small increase in profit on the cards. This means the Toll organisation should finish the financial year at around $4.5 billion creating a profit margin around $176 million. Speaking at the media conference about the results, Brian Kruger, Toll Managing Director, was keen to emphasise the improved productivity of the various divisions of Toll in difficult trading conditions as the reason for the steady result.
“This result has been well supported by progress in improving productivity and reducing costs,” said Kruger. “While we have continued to do well retaining key customers and winning new contracts, the competitive environment has maintained pressure on margins. We remain disciplined in the returns we require when bidding for new work and this has limited revenue growth in some markets.
“We remain committed to ensuring we build on our position as Australia’s leading transport and logistics provider through continuing our targeted capital expenditure and investing through the economic cycle to position ourselves for future recovery in market conditions.
“Being able to invest in fleet, facilities and systems to meet our customer needs both in Australia and in our developing international business is a key differentiator, along with our focus on safety, with the last six months seeing further improvements in our performance in this critical area. This capital spending is well supported by our One Toll program, which continues to provide increasing benefits across the Group.”
Apart from the obvious talk of productivity and ongoing profitability the company was also talking a lot about its safety record and improved safety performance on 2013. Toll have launched the ‘Think safe. Act safe. Be safe.’ campaign and point to a 19 percent reduction in the Lost Time Injury Frequency Rate, which measures the number of lost time injuries per million hours worked.
A number of the trucking based division showed a lower revenue, due to reduced work from the resources sector and soft economic conditions all round. A major Australian Defence Force contract ends in May 2014, putting further pressure on Toll’s Specialised and Domestic Freight division to expand elsewhere.
The next year is probably going to be a little better for Toll as they can play the safe pair of hands argument with potential big corporate clients. The debacle over the Cootes safety and maintenance issues continues to make corporate Australia very wary of suppliers who hope to put their corporate logo on trailers. Bad TV coverage can be very expensive, and the big players like Toll can offer a little more security simply due to their sheer scale and level of expertise.