TIL Provides Earnings Guidance
26 Jun 2020
- While TIL Logistics’ businesses are recovering post the lifting of Covid-19 restrictions, the Covid-19 event has had a material impact on the underlying trading performance of the Group and the wider economy and the Board retains a cautious outlook.
- Good progress is being made on FY20 initiatives to drive Group performance.
- For the financial year ending 30 June 2020 (FY20), EBITDA (excluding impact of IFRS 16) is expected to be between $25m and $27m, down on the prior comparative period (FY19) of $28 million, but ahead of the March 2020 guidance of $23-$24 million EBITDA that was withdrawn at the beginning of the Covid-19 restrictions later that month.
- For FY21 financial year, EBITDA is expected to be at least that of the FY20 result.
New Zealand freight and logistics company, TIL Logistics Group Limited (NZX: TLL, “TIL”), advises that its businesses are recovering since the lifting of Covid-19 restrictions. While management remain cautious about the trading environment, there is now greater certainty around the impact of Covid-19 and ongoing performance, and the Company is reissuing guidance for the FY20 financial year.
TIL Logistics is expecting FY20 EBITDA (excluding the impact of IFRS 16) to be between $25m and $27m. For the following FY21 financial year, EBITDAis expected to be at least that of the FY20 result.
While a number of TIL Logistics’ businesses continued to operate as essential businesses during the lockdown, all divisions were adversely affected by Covid-19. The Company implemented a number of measures during this time, including those set out below:
- The Government wage subsidy allowed for TIL Logistics to retain and pay over 1,500 employees at least 80% of their wages.
- Increased focus on efficient use of the fleet.
- The Directors reduced their fees by 25% and the Executive Team reduced their salaries by 20% during Alert Level 4.
- TIL received support from some landlords and its asset leasing partner during the period. TIL also worked closely with its customers to offer them support where possible.
- TIL’s level of essential service trading and recovery since lockdown, combined with the wage subsidy, provided the liquidity required to trade through the Alert Levels 2 - 4.
Cashflow and cost control remains a priority and all non-essential operating expenditure and capital expenditure continues to be carefully reviewed.
Good progress being made on FY20 initiatives to drive Group performance
- Previously announced initiatives to lift the performance of the Freight division are continuing, with a stronger management and operational structure and an increased focus on sales and marketing functions. A new Executive General Manager has been appointed and is leading the turnaround plan for the Freight Division.
- Technology remains a key focus, with final testing of the new Transport Management System now complete and to be rolled out over the next few months, which is expected to further enhance the efficient use of the fleet.
- Recent procurement initiatives are expected to deliver long term cost benefits.
- Strengthening of the executive team with a number of new appointments over the last year.
- Continuing focus on sustainability with investment into new electric forklifts, green building standards for new warehouses, and ongoing partnership with Hiringa Energy around hydrogen fuel solutions.
- In March 2020, TIL acquired the outstanding shareholding in the ATL joint venture. This will further enhance the freighting opportunities within Central Otago and provide a more streamlined service for customers and suppliers, with financial benefits being recognised in TIL Logistics’ consolidated trading performance.
- Performance from MOVE’s expanded warehousing business remains solid, but with less stock movements over the Covid-19 lockdown period.
Operating Environment Outlook
While the future outlook for TIL Logistics remains positive, the flow-on effect of Covid-19 will be felt for some time and the company retains a cautious outlook on the economy and the trading environment.
TIL should be better placed than many other businesses in the ‘new normal’, with strong brands and a diverse customer base across multiple sectors, some of which have been seeing strong performance levels, such as in the aquaculture, viticulture and other primary industries, however the speed of the recovery in the construction, retail and energy sectors remains uncertain. The current environment has demonstrated the benefits of being a group of scale, with the ability to invest into health & safety, training, systems and infrastructure.TIL Logistics is well positioned to take advantage of opportunities within the sector.