Date: May 16 2012
Toll Holdings shares slumped as much as 14 per cent this morning after the company warned that pre-tax earnings for this financial year will be lower than in the previous year because of soft retail conditions.
Joining a growing list of companies to warn of the tough trading conditions, the transport and logistics company said today that it now expects pre-tax earnings of between $400 million and $420 million this year, compared with $436 million in earnings before interest and tax in 2010-11.
The guidance does not include a hit to its earnings of up to $175 million from write-downs to the carrying values of its struggling Japanese venture, Footwork Express, and to property in Australia.
Shares in Toll fell 78 cents to $4.18 in early morning trading following the profit warning.
Toll’s new chief executive, Brian Kruger, said the company had borne the brunt of ‘‘continued pressure from the soft retail sector’’ in Australia, which had affected the bottom-line of its domestic business.
Weakness in the global apparel sector had also adversely impacted volumes and pre-tax earnings for its global forwarding business, Mr Kruger said in a statement today.
‘‘In addition, we had seen a deterioration of the performance of Footwork Express, and continued poor financial and operational performance in Toll Marine Logistics ... particularly in Asia,’’ he said.
Toll had also experienced ‘‘significant margin pressures’’ in its interstate linehaul and warehousing operations of its refrigerated business, which is a part of the Toll Domestic Forwarding division.
As well as writing down the carrying value of Footwork Express by up to $166 million, Toll has also announced that it will conduct a ‘‘full strategic review’’ of the business.
Toll is also conducting strategic reviews of its marine logistic and refrigerated businesses.
Mr Kruger replaced Toll’s long-time boss, Paul Little at the the beginning of the year.
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