Shares in transport and logistics group, Toll Holdings hardly budged yesterday after the company joined the growing list of listed groups providing earnings warnings for the 2010 year.
Toll’s downgrade was made at the bottom of a statement lodged with the ASX very late on Monday evening.
In that statement, Toll revealed it had made a small purchase of a freight forwarding business from Qantas that will generate around $30 million a year in extra revenue.
Toll then went on to say:
"The Company also advised today that, while operating profit before interest and tax for the current half year is currently expected to be up 5-10% on the same period last year, trading conditions have recently softened across some parts of the business in Australia and continue to be challenging in New Zealand.
"Lower customer volumes are having an impact on the non-express parts of the business in particular.
"Offsetting the lower volumes in Australia and New Zealand, we have seen stronger trading performances from the Toll Global Logistics and Toll Global Resources businesses.
"Toll Global Forwarding is also beginning to see improving volumes and the benefits of recent acquisitions."
The shares eased 1c to $5.69.
But in early trading the shares fell to a new 52 week intraday low of $5.39, before recovering in the relief rally in later trading.
It was in February, in somewhat more controversial circumstances, that Toll made revealed a slump in revenue and first half earnings, which it had not issued a clear update on before the profit announcement in February.
In that statement Toll said the second half would trade in line with the first half when it revealed a 6% drop in revenue, to $3.3 billion, and a 16% fall in earnings before interest and tax of $224.1 million
"Trading conditions in the Australian businesses improved progressively through the period and revenues for the first two months of calendar 2010 provide encouraging signs that this trend will continue," the company said in the statement in February.
"The Global Resources business is continuing to see higher activity levels off the back of strong commodities demand.
"Our Asian businesses continue to experience flat trading conditions in most regions and the Global Forwarding business is still facing the challenging conditions that are being experienced throughout that market segment.
"Overall, we would expect the Group’s trading results in the second half of the fiscal year to be broadly in line with those achieved in the first half of the year."
The question from Monday’s statement is, will it?
Revenue seems to be softening and although a profit rise forecast of 5%-10%, it might not be enough to offset the 16% fall in first half EBIT.
All in all the update wasn’t very elucidating.
