Month: February 2010

MORE than $1 billion was wiped from Toll Holdings’ market value yesterday after the transport and logistics company posted a worse than expected fall in first-half profit.

The company, renowned for its acquisitive bent, reported a 32 per cent fall in net profit to $107 million for the six months to December 31, which included a $37 million charge relating to the acquisition of Japanese freight operator Footwork Express last year. Toll blamed a 6 per cent fall in revenue to $3.3 billion on the impact of the global financial crisis on trading in the markets where it operates.

First-half earnings were well below analysts’ expectations and sent Toll shares plunging 18 per cent, or $1.55, to a $7.10 six-month low yesterday. Toll’s day in the dog-house stood in marked contrast to its spin-off Asciano, which for once has enjoyed basking in a better than expected result this week.

White Funds Management managing director Angus Gluskie said many analysts had been ”too extravagant’ in their forecasts for Toll’s earnings, and management would have been wise to have talked down the high expectations earlier.

“The big surprise was the softness in the Australian business and a lack of recovery in the freight forwarding business.” he said. Freight forwarding is central to Toll’s long-term strategic plan. It wants to break into the top 10 global freight forwarders within three years by boosting revenue from about $1 billion to $3 billion, and has boasted of having more than $1 billion to spend on acquisitions.

Investors were also disappointed to hear from Toll management that the trading results in the second half would only be about the same as the first half. Although the second half is traditionally weaker, investors were hoping signs of recovery would flow through to the bottom line sooner.

The guidance implies that Toll will report a $288 million net profit for the full year – well below the market consensus of $328 million.

Responding to investors deserting the stock, Toll managing director Paul Little said the company appeared to be paying the price for “17 years of thrilling the market with our results”. He went out of his way to emphasise that trading conditions had stabilised.

Mr Little said the first six months had been one of the toughest environments for the logistics sector in many years. The low point in terms of activity in Australia had been in the first quarter, although he said conditions did recover in the second quarter and this had continued.

Source: http://www.theage.com.au/business/investors-wipe-1b-from-toll-holdings-20100225-p636.html

Most carriers from Europe and Asia are applying the so called Econo or Slow Speed in order to save bunker (fuel) costs. Generally the ships are sailing with around 20-22 knots, now they will slow down to around 16 knots resulting in increased transit-times of 2 to 7 days depending on distance travelled. In order to maintain the weekly service the shipping lines will deploy extra ships.

Source: DHL Global

More flights, greater competition and lower fares on routes between Australia and China are now possible following the signing of a new air services agreement.

The new arrangements will increase the available seats on routes between China and Australia by 70 per cent by the end of this year, and, consequently, air cargo capacity.

The national airlines of both countries will immediately be able to offer up to 10,500 seats per week between Australia’s major gateway airports and China, and a further 4,000 seats from November. Previously, seat allocations were capped at 8,500.

The new agreement also provides:

  • A special capacity entitlement to accommodate new services between China and Brisbane, with 2,000 of the additional seats for Chinese airlines quarantined for flights into and out of the Queensland capital.
  • Further opportunities for Australian airlines to operate between China and other destinations such as Europe, while allowing Chinese carriers to operate to additional points beyond Australia.
  • An opportunity for the airlines of both countries to operate via a larger number of intermediate points.

Significantly, the latest agreement contains a shared commitment to commencing negotiations aimed at concluding an ‘open skies’ agreement, an outcome that would remove most – if not all – of the existing limitations on Australian and Chinese airlines operating between the two countries.

Today’s announcement is a significant breakthrough, reinforcing the importance of Australia’s economic relationship with China, now Australia’s largest trading partner.

It will allow the airlines of both sides to better compete within the rapidly-growing Asia-Pacific region and it positions the Australian aviation industry at the forefront of the rapidly developing Chinese market.

Source: T and L News

The Asia-Pacific is now the world’s biggest aviation market and last year alone, nearly 1.4 million people travelled between Australia and China. In fact, over the past 5 years passenger growth on routes between our two countries has averaged 16.9 per cent.

Beginning on February 2, 2010 Heinz and SCT Logistics began trialing rail services between Melbourne and Brisbane.

Heinz frozen/export distribution manager Craig Kinzett said that Heinz was keen to support the trial, which offers a similar service to that which they enjoy on the East-West rail corridor.

“It is clear that rail provides a greener form of transport on interstate routes compared to road, not to mention the social sensitivity associated with road trauma,” he said. “It is an initiative that we support both now and hopefully into the future and the results thus far in relation to price and service levels received through the trial have been encouraging.”

SCT Logistics CEO Geoff Smith confirmed that the trial was underway and that early indications are encouraging in terms of being able to provide a competitive alternative to the market.

“It’s no secret that we’ve had aspirations for some time to enter the North-South rail market,” he said. “We have adopted a long-term view on this corridor, acquiring 135 hectares of land several years ago for the purpose of developing a rail freight centre in that region. North-South rail has its challenges in terms of contesting with a highly competitive and innovative road industry.

“In saying that, we are looking to adopt an alternative approach by utilising our rail van concept as we do on the East-West rail corridor. Hopefully these trials will initiate the first step in achieving our goal of running regular services on this very important route.”

Source: T and L News

As a result of recent changes in the price per barrel of crude oil and its related derivatives, certain airlines including Qantas have advised they will be increasing their fuel surcharge fee on Australian exports effective February 16, 2010.

Source: DHL Global

The latest ABS retail trade figures show that sales in December fell 0.7 per cent, seasonally adjusted, compared with a rise of 1.5 per cent the previous month.

Sales fell, in seasonally adjusted terms, across four retail industry groups: Department Stores (-3.5%), Clothing, Footwear & Other Personal Accessory Retailing (-1.9%), Food Retailing (-1.3%) and Household Goods Retailing (-0.3%). Sales rose in Cafes, Restaurants & Takeaway Food Services (2.5%). Other Retailing (0.0%) remained flat.

South Australia (-3.7%) recorded the largest fall in sales in December, followed by Tasmania (-2.0%) , Victoria (-1.0%), Queensland (-0.6%), the Northern Territory (-0.4%), the Australian Capital Territory (-0.4%) and Western Australia (-0.1%).

New South Wales was the only state to record growth in sales in December (0.1%).

Trend turnover for December 2009 rose by 0.3%.

In seasonally adjusted volume terms, retail turnover rose 1.1% in the December quarter 2009. This compares with a fall of 0.7% in the September quarter 2009.

In trend volume terms, retail turnover rose 1.3% for the December quarter 2009. This is the 5th consecutive quarter of positive trend volume growth.

Retailers generally blamed the Reserve Bank of Australia’s December rate rise for the disappointing Christmas sales figures, and predict that while January may show a slight increase owing to post-Christmas sales, retail trade will continue to struggle in the short- to medium term.

The latest ABS retail trade figures show that sales in December fell 0.7 per cent, seasonally adjusted, compared with a rise of 1.5 per cent the previous month. Sales fell, in seasonally adjusted terms, across four retail industry groups: Department Stores (-3.5%), Clothing, Footwear & Other Personal Accessory Retailing (-1.9%), Food Retailing (-1.3%) and Household Goods Retailing (-0.3%). Sales rose in Cafes, Restaurants & Takeaway Food Services (2.5%). Other Retailing (0.0%) remained flat. South Australia (-3.7%) recorded the largest fall in sales in December, followed by Tasmania (-2.0%) , Victoria (-1.0%), Queensland (-0.6%), the Northern Territory (-0.4%), the Australian Capital Territory (-0.4%) and Western Australia (-0.1%). New South Wales was the only state to record growth in sales in December (0.1%).

Trend turnover for December 2009 rose by 0.3%. In seasonally adjusted volume terms, retail turnover rose 1.1% in the December quarter 2009. This compares with a fall of 0.7% in the September quarter 2009. In trend volume terms, retail turnover rose 1.3% for the December quarter 2009. This is the 5th consecutive quarter of positive trend volume growth.

Retailers generally blamed the Reserve Bank of Australia’s December rate rise for the disappointing Christmas sales figures, and predict that while January may show a slight increase owing to post-Christmas sales, retail trade will continue to struggle in the short- to medium term.

Source: T & L News

Please be advised that there is a winter storm in New York. Due to the weather airlines have cancelled today’s flight and all infrastructures such as airports and ports have been affected. This has also impacted our US operations hence there will be no pickups or deliveries.

We are not sure what the weather will be like tomorrow as it is expected to continue snowing. Will keep you posted.

Should you require any further information please contact your T&DC representative.