Volatile market leads to tough decisions for Toll
The Toll Group has announced decisions to reduce the carrying value of its Footwork Express business and property assets along with a sell down of its Automotive finished vehicle distribution business in Australia.
June 10, 2012
The Toll Group has announced decisions to reduce the carrying value of its Footwork Express business and property assets along with a sell down of its Automotive finished vehicle distribution business in Australia. Toll said that given the continuation of extremely difficult market conditions in Japan, including the lingering impact of the earthquake and tsunami and a lower likelihood of any near term recovery, the Toll Board has decided to writedown the carrying value of the Footwork Express business by between A$146 million (US$184.8 million) and $166 million, to leave capital employed of between $200 million and $220 million. After conducting its regular property portfolio review Toll said that as a result of continuing deterioration in Australian commercial property values, the group’s Board has decided to reduce the carrying value of four sites. The group also finalised the sale of part of its finished vehicle distribution service to PrixCar, a 50-50 joint venture company between Toll and K-Line Automotive. Commenting on the earnings outlook for the 2012 financial year, Toll MD, Brian Kruger said: “We have seen continued pressure from the soft retail sector in Australia affecting the financial performance of our domestic businesses with an exposure to that sector, together with weakness in the global apparel sector impacting volumes and EBIT in Toll Global Forwarding. “In addition, we have seen a deterioration in the performance of Footwork Express, and continued poor financial and operational performance in Toll Marine Logistics (part of Toll Global Resources), particularly in Asia, and significant margin pressures in the interstate linehaul and warehousing operations of the Toll Refrigerated business (part of Toll Domestic Forwarding). “We expect this to result in underlying EBIT, including associate earnings for the 2012 financial year of between $400 million and $420 million compared with EBIT of $436 million for the 2011 financial year. Despite the challenges of the external environment, the majority of our businesses have continued to perform well, providing a strong contribution to overall Group earnings,” Kruger said.