TLL RENEWS Z ENERGY PARTNERSHIP, PROVIDES TRADING UPDATE
Jul 9 2018
TIL Logistics renews Z Energy contract, provides trading update
Pacific Fuel Haul, a division of NZX-listed TIL Logistics Group Limited (NZX:TLL), has renewed its partnership with Z Energy, with the signing of a long term, exclusive, strategic supply contract, with increased volumes and wider distribution coverage.
The renewed contract covers the North and South Islands and includes cartage of petroleum and aviation fuel for both of Z Energy’s brands, Z and Caltex.
TLL is one of the largest domestic freight and logistics businesses in New Zealand and its specialist road tanker division is one of the largest operators in the New Zealand fuel delivery market.
TLL CEO Alan Pearson said it was “pleasing to retain and build on this important customer relationship, based on a competitive process where our past commitment, performance, value add and ability to respond were taken into consideration.”
Z Energy Commercial Optimisation Manager, Hamish Dyer, said: “The contract with Pacific Fuel Haul (PFH) is more than a contract with a supplier; we are building a performance focussed extraordinary partnership where Z, PFH and our customers can have ongoing and sustainable benefits realisation. This contract provides greater security of supply for our customers, and supports Z’s commitment to environmental sustainability, with Pacific Fuel Haul’s commitment to higher drop sizes meaning less trips to deliver the same volume and therefore less carbon emissions from transport.”
TLL Trading Update
For the year ending 30 June 2018, TLL advises that it expects to deliver sales in line with the strong first half but with lower earnings. The full year result is expected to be below PFI, due to some headwinds and a few unanticipated operational factors not included in the PFI forecasts.
In particular, along with the rest of the transport industry, the company is being impacted by rising fuel costs, and the associated delay in adjusting for this in customer pricing. The bad weather and big storms have also been problematic, closing transport routes and impacting on the transport needs of large customers.
A number of new customer contracts were acquired following the expansion of TLL’s logistics division and, while these will provide strong cashflows and profitability over the long term, the short term costs required to set up resourcing for these have had some impact on results compared to PFI. As noted at the half year, the full year result will also include the earnout liability for MOVE, which is being assessed following year end.
The Board remains confident in TLL’s ability to continue its growth and deliver shareholder value. The company is currently assessing a number of acquisition opportunities and expanding the fleet. Management remain focused on continued organic growth - driving efficiencies, leveraging scale, expanding the offer and growing TLL’s existing businesses.