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TRANSPACIFIC Industries Group (ASX:TPI) today revealed its $16.5 million net profit after tax for the six months to December 31, 2011 was 48 per cent less than the previous corresponding period.
CEO Kevin Campbell (pictured) cites challenging economic conditions in Australia and New Zealand, but denies the Christchurch earthquakes had a major effect.
"After the tremors in New Zealand our people still collected waste. We had people lining up bins for collection. Our trucks also went out on their own free will to help clean-up efforts," he says.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 4.3 per cent to $220.2 million.
The commercial vehicles division was a key performer, increasing revenue by 31 due to higher demand for Western Star and MAN heavy duty vehicles. Manufacturing broke even and the total waste management businesses produced modest growth and stable profit margins.
Campbell estimates a combined $150-170 million of waste management contracts are available each cycle, saying TPI typically secures 43-44 per cent of them the same as in the second half of fiscal 2011.
"Competition is healthy, sometimes you win and sometimes you lose on price, perception of service but it is a rational market. We include our high customer service standard in our pitches," says Campbell.
Net debt was $1.11 billion as of December 31, 2011 down 21 per cent from six months earlier. It follows TPI's successful refinancing package comprising of a $1.525 billion syndicated debt facility and $309 million renounceable entitlement offer.
"The refinancing package successfully completed in November 2011 is allowing us to focus on the business and operational improvements that can be achieved across all divisions within the company," says Campbell.
CFO Stewart Cummins reveals that dividends are unlikely to be paid in the current or coming financial years.
"It is important to improve profitability of the business and return on capital. Fiscal 2012 will be a year of refinancing," he says.
TPI shares today fell slightly to 83 cents per unit.
*Please note: Transpacific Industries Group (ASX:TPI) completed a changed of name to Cleanaway Waste Management (ASX:CWY) on July 1, 2016
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