This was published 9 years ago
Transpacific announces $11.5m profit after landfill asset charges
By Tim Binsted
Transpacific Industries chief executive Bob Boucher admitted his team’s performance has not been good enough as the waste handler’s resumption of dividends was marred by hefty landfill provision increases and a depressed economic outlook.
Transpacific on Tuesday reported a statutory net profit of $11.5 million after taking $269 million, or $189 million post-tax, worth of charges relating to its landfill assets.
Transpacific took in $269million in charges from its landfill assets.Credit: Robert Pearce
Mr Boucher, who took the top job in October, hit out at previous management for making poor acquisitions as he outlined an additional $125 million to $175 million of cash would be needed to fix historic landfill operating issues and to complete capping and closure works at the Clayton landfill in Victoria and other sites.
“It is clear to me that we’ve had some assets brought into the business not operating at the level expected and I can assure you that this management team will not make those types of acquisitions in the future,” Mr Boucher told analysts and investors.
The nation’s biggest waste management company went into a trading halt last week pending the revised landfill provisions. Investors sent the stock 7.8 per cent lower to $1.01 by 1pm on Tuesday as the stock resumed trading.
Excluding the landfill charges and other material items, underlying net profit for the year ended 30 June rose 35 per cent to $92 million.
Revenue for continuing operations - which strips out the New Zealand business which was sold to Beijing Capital group for $880 million - fell 3.3 per cent on the year prior period to $1.4 billion.
Perpetual head of equities Matt Williams said there was not much good news in the result.
“It’s a tough operating environment and [there was] a mammoth increase in remediation spend on landfill sites,” Mr Williams said.
“Longer term the company looks interesting due to a strong balance sheet, and solid business base. These positives can hopefully be harnessed by this new yet experienced management team.”
Since the global financial crisis Transpacific has been battling its debt burden and shedding assets after an acquisition binge under the leadership of founder Terry Peabody.
The sale of the New Zealand business has taken the company to a net cash balance of $137 million compared with net debt of $978 million last year.
Shareholders will also receive their first dividend since 2008 as chairman Martin Hudson reinstated a regular dividend policy of paying out between 50 per cent and 75 per cent of underlying net profit after tax.
A fully-franked dividend of 1.5¢ per share was declared on Tuesday.
But operating conditions remain weak and Mr Boucher gave little cause for optimism with his outlook statements.
Underlying earnings in the Cleanaway business fell 2.3 per cent to $189.8 million on slightly lower revenues as soft economic activity hurt waste volumes.
The Industrial services business reported a 7.3 per cent slump in revenue to $485 million and a 16 per cent dive in underlying earnings to $90.1 million.
The high Australian dollar and stagnant manufacturing and industrial activity weighed on revenue and earnings.
Mr Boucher said he is focused on addressing market share losses, boosting waste volumes, acquiring the right landfill capacity, and lifting internalisation, which means disposing of more waste in Transpacific’s own landfills.
“I’m not happy with the result and I expect conditions to remain difficult, but I’m confident the team is reinvigorated,” Mr Boucher said.
“I’m not satisfied operationally or with sales and growth appetite ... we absolutely have to get out there and fight for every unit [of waste].
“We need to make sure we do better with the assets we have today,” he said.