Transport and logistics group Toll Holdings has warned of lower earnings in 2012, sending its shares plummeting.
Toll on Wednesday announced writedowns on its freight operations in Japan and some of its Australian property assets; and the sale of part of its automotive business in Australia.
It insisted that most of its businesses were performing well, but said the soft retail sector in Australia had hurt Toll’s domestic business.
Weakness in the global apparel sector had also affected volumes and earnings in Toll’s global forwarding business.
Toll said it expects underlying earnings before interest and tax (EBIT) to fall to about $400-$420 million, excluding one-off items but including associate earnings.
The company reported EBIT of $436 million for the 2011 financial year.
Shares in Toll plunged in early trade and were 83 cents, or 14.8 per cent, lower at $4.75 at 1303 AEST.
“Despite the challenges in the external environment, the vast majority of our businesses have continued to perform very well and are still providing a very strong contribution to overall group earnings,” Toll managing director Brian Kruger told reporters.
The global forwarding business was still an attractive sector in the long term despite the difficulties it faced.
Mr Kruger said Toll would review its troubled Footwork Express, Toll Marine Logistics Asia and Toll Refrigerated businesses.
Footwork Express is an express freight operator in Japan, delivering small volumes of goods – less than one truckload – from business to business across many sectors.
Toll Marine Logistics Asia is a bulk handler and transporter of coal, steel, iron ore and pellets, sand and aggregate. Two-thirds of its business is exposed to moving coal out of Indonesia.
Toll said the customers of Footwork Express were wanting lower volumes of goods moved, reflecting Japan’s weaker economy in the wake of the earthquake and tsunami in Japan.
Toll Marine Logistics, which had been performing below expectations for more than 12 months, had suffered from some adverse contract structures and softness in the spot charter market.
The Toll Refrigerated business was experiencing significant margin pressures in its interstate linehaul and warehousing operations.
Toll said it would write down the value of the Footwork Express business by between $146 million and $166 million.
It is expected to make a loss of up to $10 million this financial year.
Toll also decided to write down the value of four sites in its property portfolio by $56 million (pre-tax) to reflect falling commercial property values in Australia.
Toll’s container hub at Villawood in Sydney had been hurt negatively affected by the exit of BlueScope Steel and the federal government’s decision to support development of a government-owned freight hub at nearby Moorebank.
Toll also said it had finalised the sale of its finished vehicle distribution service to PrixCar, a 50:50 joint venture between Toll and K-Line Automotive.
The sale will deliver to Toll a one-off gain of about $47 million.
