K&S reports solid first half performance

Company consolidates position in the black with net profit rise

K&S reports solid first half performance
K&S has a reasonable first-half story to tell


K&S Corporation has found a wide silver lining its somewhat grim first half forecast of less than three months ago.

Back then, chairman Tony Johnson prepared shareholders for a 15 per cent fall in underlying profits for the six months.

Now they find the word ‘up’ on net profits — 15 per cent to 4.6 million — and revenues, 18.6 per cent to $417.6 million — compared with the same period last year.

To be sure, that underlying profit was down as forecast but at only 8.6 or 7.5 per cent, depending on tax.

And the company made plain that there were difficulties faced by certain segments, along with the gains.

"We have realised improved trading in our Western Australian and Northern Territory resource businesses," it says.

"Our chemical business, predominantly on the east coast, experienced weaker market conditions.

"Continuing to impact our trading results, and the first half result, was the reduced South32 coal volumes due to mine related issues.

"South32 is forecasting coal volumes to slowly increase over the next 12 months.

"Australian East Coast intermodal and contract logistics operations generally performed well.

"Following Aurizon’s recent closure of its intermodal rail business, we migrated our rail volumes to Pacific National."

The New Zealand business continued steady improvement in revenue and profitability.

"Fuel trading volumes continued to increase.

"Additional operating sites were added to our network during the period.

"Consequent to reduced winter rainfall agricultural aviation demand was lower than normal."

Contractor, employee and fleet expenses were all up, averaging around 10-15 per cent on the previous corresponding period.

K&S is usually coy on its earnings guidance but an air of confidence was detectable this time around.

"We expect that new contracts that have recently commenced will provide additional revenues in the second half of the financial year," it says.

"We are confident the business is well positioned for growth as economic conditions improve."


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