Waste group Transpacific Industries has posted an improved December half profit of $42 million, up from $16.5 million a year earlier, but with its key waste divisions a drag on the earnings recovery as it forecasts a flat outlook.
Revenue rose to $1.16 billion from $1.2 billion a year earlier with earnings a share at 2 cents from 0.7 cents.
“The operational performance of our waste management businesses is disappointing and we need to improve our performance markedly," the chief executive Mr Kevin Campbell said.
"We are taking concrete actions to improve efficiency, lower operating costs, sell or close unprofitable or uneconomic businesses, and generate organic growth.
In Australia, landfill volumes slumped 24 per cent which had a significant impact on margins, it said.
The decline reflects the downturn in manufacturing in NSW and Victoria, coupled with Queensland's decision to remove its waste levy which has resulted in NSW waste being dumped over the border.
“In Australia, where our Cleanaway landfill businesses have been significantly impacted by the variation in landfill levies between New South Wales and Queensland, we continue to make representations to the governments ... to resolve this untenable situation as soon as possible.
“We expect market conditions in the second half to remain similar to those experienced in the first half."
A review of the organisational structure has resulted in around 200 employees being retrenched, Transpacific said, saving $15 million a year in costs with $3 million of these savings expected to be realised in the second half, before approximately $7 million in restructuring charges.
During the December half, net proceeds from divestments totalled $10 million, and since then a further $15 million has been raised from property sales along with the divestment of the Australian and New Zealand metals manufacturing businesses.
It is targetting paying down debt by $10 million a month, with the aim of cutting the interest bill by $25 million over the year to June.
Transpacific did not declare an interim dividend.
Shares in Transpacific have risen strongly this morning, going up 6.5 cents - 8.3 per cent - to 86 cents.