Written on the 19 August 2014
TRANSPACIFIC Industries Group (ASX: TPI) has improved on its position from last year and declared its first dividend since 2008.
TPI recorded a bottom line profit of $11.5 million but underlying net profit after income tax rose 35 per cent to $92 million.
The bottom line was a turnaround from a loss of $218.7 million in the previous corresponding period.
TPI chairman Martin Hudson says the company has benefitted from changing its face in October 2013, which allowed for a final dividend of 1.5 cents per share to be declared and paid on 8 October.
"Since the board appointed Bob Boucher as CEO in October 2013, excellent progress has been made on delivering a strengthened balance sheet and a renewed operational leadership team," says Hudson.
"The company has a clear and deliverable strategy, a strong net cash position, improved long-term debt facilities, and lower underlying interest expense, all of which will allow it significant scope to pursue strategic growth opportunities as they arise.
"We have addressed the significant matter of our long-term provisioning for landfill remediation and also allocated additional funding to tackle rectification at a range of landfill site."
CEO Bob Boucher has implemented a four-point strategy that has assisted with this, and expects it to help the company "bear fruit over the next 18 to 24 months" despite difficult Australian conditions in mining, manufacturing and industrial sectors.
Boucher's strategy prompted a divestment program that netted more than $1.1 billion in proceeds, the closure or selling of 39 underperforming branches in Australia and New Zealand, and a 33 per cent reduction in total recordable injury frequency rate over the period.
"Trading conditions have remained difficult, particularly in Queensland and West Australia," says Boucher of the past financial year, which has seen revenue declines of 1.4 per cent and 7.4 per cent in the company's Cleanaway and Industrials divisions respectively.
"Factors such as the continued strength of the Australian dollar, numerous announcements regarding the closure of manufacturing capacity, and weakness in the mining sector have definitely impacted business activity in these important sectors of the Australian economy.
"We expect Cleanaway to show a modest increase in earnings in financial year 2015 but the Industrials division will continue to be challenged by economic conditions and difficult markets."
However, Boucher is confident his strategy will improve the company in the long term.
"The implementation of a four-point strategy to address revenue growth, improve landfill capacity and internalisation, maximise productivity and target tuck-in acquisitions, should ensure we will bear fruit during a time significant economic headwinds are facing the industry."
Boucher says the dividend payout is something the board wants to make a point of continuing, aiming for a regular dividend of between 50 to 75 per cent of underlying net profit after tax.
"We now have the financial strength to resume paying dividends while also being poised to take advantage of a number of growth and investment opportunities available to us across all our Australian waste businesses.
"The next phase is improving our operational performance and laying a solid platform for growing our business and improving cash flows."
"The board now has the confidence to return to declaring dividends which is a pleasing sign of the progress we have made," he says.
"Our intention is to pay a regular dividend of 50 to 75 per cent of underlying net profit after tax."
TPI's share price dropped 7.05 per cent to $1.02 per share following the results announcement earlier today.