TransPacific Industries (TPI) shares fell more than 3% yesterday (in a very weak market) after the waste operator revealed what was in effct an earnings downgrade.
The company said it would take a multi million dollar charge for costs relating to the grounding of its entire fleet of trucks after a fatal accident in August.
The shares fell 2.1% to 90c.
Transpacific said the cost of the fleet grounding will be up to $20 million.
In fact the company expects the incident to reduce its first half earnings before interest and tax by between $18 million and $20 million.
About $7 million of the cost is associated with vehicle repair.
The balance of the costs relate to matters including roadworthiness inspections, subcontracting, vehicle write-offs and lost revenue during the suspension of service.
TPI YTD – Transpacific flags $20m cost
Transpacific grounded 2,800 trucks across Australia following the August fatal crash.
More than 2,000 vehicles underwent safety inspections during the grounding and a subsequent review of its fleet resulted in the retirement of a range of older vehicles.
Chief executive Robert Boucher said in the statement to the ASX the fleet and operations review would be of long-term benefit to the company.
“As part of our process to return the fleet to service, we are addressing our policies and procedures in relation to vehicle maintenance and road safety and are focused on improvements in the key areas of fleet maintenance, driver training and asset management, which will improve the durability of our operations," he said yesterday.
