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HardWorkingMan
Deputy Commissioner
Joined: Aug 19, 2004
Last Visited: Aug 1, 2008
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Posted: Tue Feb 19, 2008 9:24 am
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Both Toll and LinFox are into anything involving transport they can make money out of. They both identify niches where the customers are dissatisfied with the current service and offer improvements to gain that customer's business providing they can do so at a profit. There are sections in both that want to use more rail but the red tape involved removes their competitive advantage or prevents them from doing it altogether (eg won't guarantee an overnight service Melbourne - Adelaide).
There has been a trend in business in general to concentrate on the customers or areas that are the most profitable and rail is now going down that path. The only time you may carry low return items is to encourage people to your business so you can sell them a higher profit item. This happens with newspapers and MetTickets in most shops that sell them.
It is about the return to the owners (or shareholders) so why spend tens or hundreds of millions of dollars on specialist equipment that is only used a couple of months a year to cart goods that only offer a low return when you could invest that money in another arm of your business that brings in better returns.
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mjja
Sir Nigel Gresley
Joined: Jan 13, 2003
Last Visited: Nov 17, 2008
Location: Mount Waverley, Melbourne
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Posted: Tue Feb 19, 2008 6:34 pm
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Linfox hate Toll, as does every other company in the transport industry. And they no longer merely dabble in rail because they now own FCL Transport, which is a very large rail user (third largest customer of PN in tonne-kms behind BHP and Toll at one point).
Happy Gunzelling and remember, "Go by rail!"
Michael Angelico
President, Smart Passengers Inc
(My opinions are my own unless specifically stated.)
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DalyWaters
Deputy Commissioner
Joined: Oct 31, 2006
Last Visited: Nov 20, 2008
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Posted: Fri Feb 22, 2008 8:39 pm
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From todays Australian :
| Quote: | At a media conference, Mr Little revealed that less than a year after spinning off its port and rail operations into the listed Asciano Group, he was interested in buying assets in Queensland Rail, which is Asciano's arch rival.
"You never know," he said.
Mr Little said he was looking at any Queensland Rail asset sales. |
Question One :
How will Pacific National / Asciano go competing against Toll? Toll, having been the previous owner of Pac Nat, would have a lot of inside knowledge of their contracts and customers.
Question Two:
Are Queensland Rail looking to sell? Presumably, if they sold, it would be Interrail and ARG. How horrifying to think of Australias dominant interstate rail operators being Asciano and Toll!!
From Macquarie Reseach Equities :
| Quote: | Asciano (AIO) has been sold off heavily this year, with the stock price down 15.57% since 02-Jan-08. Macquarie Research Equities (MRE) said that false rumours in the market that AIO is having trouble funding capital requirements for its Queensland coal contracts has resulted in the stock being aggressively oversold. AIO is now MRE�s key pick in the sector and they accordingly reiterate their outperform recommendation and 12-month price target of $9.82.
MRE have spoken to management and the rumours surrounding the funding for the rolling stock is completely false in two regards. Firstly, AIO will not need financing for the new rolling stock for at least another 12 months. Even if they were to do so now, as the rumours suggest, there is back to back earnings certainty in these contracts that virtually ensures availability of funds at the right price.
Operationally the business is sound. Management also indicated that the shutting down of the grain business is going smoothly and port container volumes continue to be extremely strong, and already in the five months to November, port volumes were up 9.0%, ahead of our forecast for the year of 7.8%. Additionally, all indications are that December will be a record month.
While its debt level is high, AIO has only $284m of debt (5% of total) to rollover this year. Management have indicated that while a regearing is desirable, it is by no means necessary. Even if AIO were to regear, there is clear evidence that credit markets are still open for quality infrastructure assets � like the Dec-07 $350.5m purchase of Hobart Airport.
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Interesting comments!!!!!
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nutbagg
Assistant Commissioner
Joined: Feb 11, 2007
Last Visited: Nov 18, 2008
Location: In Willy Wonka's Chocolate Lake
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Posted: Tue Feb 26, 2008 10:55 pm
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Toll are just looking at the assets in Queensland thinking "there's some good quality assets we can run into the ground and suck as much cash as we can in a short time then flog it of and run off into the sunset"
Just look at PN/Patrick=Asciano.
Mate, if that loco pulls as hard as you do, it'd move anything.
I'd still rather have an ALCo.
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DalyWaters
Deputy Commissioner
Joined: Oct 31, 2006
Last Visited: Nov 20, 2008
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Posted: Wed Feb 27, 2008 5:21 pm
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| Quote: | It is no doubt niggling Asciano boss Mark Rowsthorn that he is struggling on the home front to meet the mortgage while his former partner Paul Little of Toll Holdings has gone off on a shopping spree around Asia.
When they split up last year, Little left Rowsthorn with all the debt and a Macquarie-inspired corporate structure, and Rowsthorn promptly made things worse by making a move on Brambles, a company three times Asciano's size, just before the top of the market.
There is a lot of debt in Asciano and that's why the stock price has been shellacked. Toll had been on an acquisition binge ever since it listed and his final shopping item was Chris Corrigan's Patrick Corporation, a company the same size as Toll.
It was all rollicking good bull-market fun. But things have been awfully quiet around Asciano since Christmas. The latest news was a little release to the ASX saying Asciano had asked the regulator, ASIC, for relief on reporting its interim results. It was given time and now has to report by March 12.
The rub is that this will be its first report since demerging from Toll.
While Little has been shopping harder than a Beverley Hills housewife, announcing transport and logistics acquisitions across Asia, the news vacuum at Asciano has been galling for shareholders.
They have a bit more to go on than the prospectus alone. There was a company presentation, and accompanying 5% earnings downgrade on December 11. A few asset sales were forecast: plans to exit the freight rail business in Victoria and NSW and the Pacific National operations in Tasmania.
And to the relief of the market, Rowsthorn conceded his putative $20 billion takeover bid for Brambles was off the agenda. But that left him with a $700 million stake in Brambles to fund. He sold down from 4.1% to 3.44%, rescuing $100 million, but the financing costs on the rest have left him hamstrung as Brambles' share price also tanked.
Asciano, despite its suite of quality infrastructure assets, has been downgraded savagely by the market and it can't be helping his negotiations to refinance with the banks.
At the December briefing, Rowsthorn's finance man, Austen Perrin, revealed the net interest on carrying the Brambles stake was $335 million to $340 million. On top of the company's $5.2 billion in syndicated bank facilities and $108 million bank guarantee facility, Asciano's leverage may not be crippling yet but it would appear to be critical.
There will be a large cashflow shortage this year, perhaps a cash shortfall in the order of 40% of shareholders' funds.
In the December presentation, Perrin and Rowsthorn said average maturity of their borrowings was "over three years'' and nearest maturity was $258 million to be rolled in May. May is creeping up on them. And while they noted that the majority of Asciano's debt was hedged for the next two years, they only disclosed the `average maturity' of their debt was three years, rather than the `weighted average maturity'.
We don't know what lumps of debt are due when and on what terms.
Thankfully for shareholders, because the assets are high grade the banks are unlikely to enforce any breach. As revealed in the Allco numbers yesterday, there was a $900 million chunk of debt which could be called by the banks, given the fall in Allco's market cap.
Despite Allco's death spiral, the banks are loath to call in the receivers just yet. Big writedowns are not a good look for their own profit numbers.
Asciano is no Allco yet - net debt-to-equity is in the vicinity of 185 times, while there is no cash interest cover and a looming cash deficit in the order of $1 billion.
No doubt the asset sales program will be ramped up. Still, the vultures of private equity have vanished from the market, the likes of Babcock and Macquarie have their own issues and don't spend like they once did, and asset sales targets must be under pressure.
Against the backdrop of rising rates, market distaste for leverage and Asciano's information vacuum, this one will be a white-knuckled ride for shareholders.
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From The Age business section. Feb 26.
I think a few people in the rail industry might be able to suggest some more reasons at to why Asciano are risky. Can't wait to see the financial report due in the next few weeks.
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mjja
Sir Nigel Gresley
Joined: Jan 13, 2003
Last Visited: Nov 17, 2008
Location: Mount Waverley, Melbourne
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Posted: Fri Feb 29, 2008 12:03 am
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The saga continues...
From what I've read of the history of the rail industry (since it started), whenever railway people try to play high finance it ends in tears. The tragedy is that it usually ends with valuable infrastructure being ripped out, to the detriment of future generations.
If only they'd stick to earning their money from their customers, like most businesses have to, and getting a loan from the bank for really big re-equipment programs (just like anyone can go and get a home loan), everyone would be a lot better off in the long run.
Happy Gunzelling and remember, "Go by rail!"
Michael Angelico
President, Smart Passengers Inc
(My opinions are my own unless specifically stated.)
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42101
Banned
Joined: Oct 12, 2005
Last Visited: Sep 27, 2008
Location: Banned
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Posted: Mon Mar 03, 2008 11:17 am
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ABC finance news just said that Asciano have just announced a after tax LOSS of $71m.
Banned
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DalyWaters
Deputy Commissioner
Joined: Oct 31, 2006
Last Visited: Nov 20, 2008
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Posted: Mon Mar 03, 2008 1:55 pm
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Asciano $71m loss, earnings downgrade
| Quote: | Transport infrastructure company Asciano Group has downgraded its annual earnings forecast due to problems shifting coal in the NSW Hunter Valley, but says its coal haulage business will assume more prominence in future.
Asciano shares were 25 cents lower at $4.72 at 12.24pm today.
Asciano, which was spun off from Toll Holdings in June 2007, today booked an unaudited net loss of $71.07 million for the period June 15, 2007 to December 31, 2007.
The result included significant items of $150.12 million before tax, relating partly to the demerger of Asciano from Toll, but mainly to the restructure of the group's grain haulage business in NSW and Victoria, which Asciano is likely to close.
Earnings before interest, tax, depreciation and amortisation (EBITDA) before significant items rose 19.2% to $365.9 million.
But Asciano downgraded its EBITDA guidance for the full 2008 year.
Asciano chief financial officer Austen Perrin said that, in December last year, the group had forecast annual EBITDA of $615 million to $625 million for fiscal 2008, after restructuring and one-off costs.
He said Asciano was now downgrading its earnings forecast by 3%, mainly due to continued Hunter Valley coal capacity issues.
''After adjusting for special items, the likely reported (EBITDA) is in the range of $610 million to $620 million,'' Mr Perrin said.
Asciano chief executive Mark Rowsthorn said the group's exposure to growing commodity exports, containerised and motor vehicle imports, and domestic freight should see Asciano continue to generate annual organic EBITDA growth of 10-15% over the longer term.
''In terms of '09, with the economy softening slightly, we see that our forecast or guidance for next year will probably be at the lower end of the 10-15% improvement,'' he said.
''But moving into the 2010 year, with the Queensland coal contracts coming on board, we believe that we'll be in the upper end of that guidance.''
Mr Rowsthorn said expansion into Queensland coal haulage and growth opportunities in Saudi Arabia would be among Asciano's main drivers in future.
He said Asciano's ocean terminals business and Pacific National intermodal (container) business were important.
``However, I see those balances being evened out over time as the coal business improves and we expand into Queensland,'' Mr Rowsthorn said.
''And also in bulk ports, we've got some tremendous opportunities to expand that business, so less reliance perhaps on our intermodal and the Patricks ocean terminal business.''
Asciano said that in the short term, addressing capacity constraints in the coal supply chain in the Hunter Valley and completing the restructure of the loss-making Pacific National rural rail business were high priorities.
Mr Rowsthorn said that in the first half, three of Asciano's divisions - Patrick container ports, Patrick auto, bulk and general, and Pacific National intermodal - had performed to plan and continued to trade strongly into the new year.
But earnings of Pacific National bulk, which shifts coal in the Hunter Valley and grain in NSW and Victoria, had fallen.
Mr Rowsthorn said there was very strong demand for coal, but the supply chain was being hampered by capacity issues at the ports and in rail track infrastructure.
''We've been unable to manage our way through that as successfully as we anticipated, but plans are well under way to shore up that,'' he said.
Asciano was continuing to invest in coal haulage operations in the Hunter Valley and was about to introduce three new trains there.
Mr Rowsthorn said the company had announced in December last year that it would close the grain business, which had been affected by the drought.
''That process is under way, and our conviction to downsize it is very strong,'' he said.
Revenue from ordinary activities in the first half increased 3.9% to $1.5 billion.
The company declared an interim distribution of 23 cents per security.
AAP |
From The Age website today
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ParkesHub
Chief Commissioner
Joined: Jul 29, 2003
Last Visited: Nov 8, 2008
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Posted: Mon Mar 03, 2008 6:20 pm
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It all sounds a bit 'smoke and mirrors' designed to keep the share price from diving any lower. Mr Rowsthorn doesn't have Mr Slick, Paul Little, to do the shareholder sell job anymore.
Also, I think the ARTC would strongly disagree that the coal railway/s into Newcastle are in any way responsible for creating bottlenecks as this press release notes: ARTC Press Release. I guess Mark Rowsthorn had better get sutck into the port authorities!
But, with the swing away from grain (and the intermodal hint!), they have to focus on the money making exercise of coal haulage to resurrect the fortunes of Arseiano (how arrogant to name a public company after your favourite Tuscan town!).
Not even the $20 million from Brumbles will save the Vic rail network...shareholders come first!
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a6et
Chief Commissioner
Joined: Aug 13, 2006
Last Visited: Nov 20, 2008
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Posted: Mon Mar 03, 2008 6:35 pm
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| ParkesHub wrote: | It all sounds a bit 'smoke and mirrors' designed to keep the share price from diving any lower. Mr Rowsthorn doesn't have Mr Slick, Paul Little, to do the shareholder sell job anymore.
Also, I think the ARTC would strongly disagree that the coal railway/s into Newcastle are in any way responsible for creating bottlenecks as this press release notes: ARTC Press Release. I guess Mark Rowsthorn had better get sutck into the port authorities!
But, with the swing away from grain (and the intermodal hint!), they have to focus on the money making exercise of coal haulage to resurrect the fortunes of Arseiano (how arrogant to name a public company after your favourite Tuscan town!).
Not even the $20 million from Brumbles will save the Vic rail network...shareholders come first! |
Not that I am up with it or anything. But I wonder with this, as when I think of the amount of coal that is shipped through Newcastle now, & I cannot imagine their share of it, how on earth they are losing money on it.
If they are losing money now, they are never going to make money. When I think of the loads by one train, with just two men up front what is the overall costs of the operation of these large tonneage trains.
Some time ago, after Corrigan bought out the rail network, after around 12 months of operations he called for the government to provide him with financial assistance.
It really makes one wonder just how bad things were under government control.
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42101
Banned
Joined: Oct 12, 2005
Last Visited: Sep 27, 2008
Location: Banned
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Posted: Mon Mar 03, 2008 10:36 pm
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Rowbottom was just on lateline business whinging that the whole Australian rail network is stuffed and the Gov should fix it and now not later instead of spending money on roads.
He has a smegging hide it was his mob who stuffed Vic and Tas yet now the taxpayers should fund fixing the systems...F*ck him make PN stump up equal funding to fix the run down they created.
Banned
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ParkesHub
Chief Commissioner
Joined: Jul 29, 2003
Last Visited: Nov 8, 2008
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Posted: Tue Mar 04, 2008 11:09 am
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| 42101 wrote: | Rowbottom was just on lateline business whinging that the whole Australian rail network is stuffed and the Gov should fix it and now not later instead of spending money on roads.
He has a smegging hide it was his mob who stuffed Vic and Tas yet now the taxpayers should fund fixing the systems...F*ck him make PN stump up equal funding to fix the run down they created. |
Thanks for the info, Greg. The transcript is here: ABC Lateline. He waffles on a great deal about "going forward" but it's typical in the lack of content.
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42101
Banned
Joined: Oct 12, 2005
Last Visited: Sep 27, 2008
Location: Banned
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Posted: Tue Mar 04, 2008 11:11 am
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Parkeshub cheers mate  i only caught the last few minutes of it so i will read the transcript now.
Banned
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Termite
Chief Commissioner
Joined: Feb 10, 2004
Last Visited: Nov 17, 2008
Location: In a dark alley!
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Posted: Tue Mar 04, 2008 11:38 am
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What about the money they were originally going to put up to assist in repairs to the network??? They backed out of that real quick.
Come on Asciano, it's YOUR trains that are making the tracks the state of disrepair, put some coin into the tracks yourself.
Termite
Say what you want about me, I don't lose sleep at night worried what you're thinking....
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flying_donkey
Deputy Commissioner
Joined: Apr 18, 2004
Last Visited: Nov 22, 2008
Location: Well, at the moment, right here!
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Posted: Tue Mar 04, 2008 2:44 pm
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| ParkesHub wrote: | | Also, I think the ARTC would strongly disagree that the coal railway/s into Newcastle are in any way responsible for creating bottlenecks as this press release notes: |
And I don't blame them! They spent how many millions of dollars to build a flyover to remove pretty well much the only bottleneck on the system! The only bottleneck left is the five dump stations Port Waratah Coal Services have to service the Hunter Valley, Ulan and Gunnedah coal basins. I know they're expanding the stockpiles at Kooragang, but IMHO, PWCS need to install at least two more unloading points.
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