Transpacific profit cleaned away by NZ natural disasters SARAH-JANE TASKER From: The Australian June 30, 2011 12:00AM
Transpacific makes a loss Source: The Australian TRANSPACIFIC Industries, Australia's largest waste management company, has forecast a significant annual loss, weeks after flagging a profit, as it writes down the value of two divisions.
The Brisbane-based company revealed the loss yesterday when it released the results of an impairment review, which will see the company book a non-cash writedown on the carrying value of intangible assets of between $225 million and $250m.
Transpacific also outlined yesterday that it expected a full-year loss of between $177m and $209m. On June 7, in a trading update, the company had forecast a net profit of between $41m and $48m, compared with a 2010 profit of $59m.
The bulk of the writedowns will be $180m-$200m for its New Zealand division said to be prompted by uncertainty in the economy.
"This impairment relates to non-cash writedown of goodwill arising solely from the need to apply a more conservative future growth rate to the NZ division, given the difficulties facing the New Zealand economy, both generally and as a consequence of its recent natural disasters," the company said in a statement. "The planned writedown does not reflect TPI New Zealand's current business performance, which continues to be strong. It remains an integral part of TPI's total waste management service offering." The company said in a June 7 trading update that its New Zealand business had been trading satisfactorily in spite of the difficult economic climate and natural disasters in the region.
The writedowns included $40m-$45m for the manufacturing division, which the firm said related to its plan to restructure its manufacturing operations to stabilise performance.
Transpacific's manufacturing division makes parts for waste disposal vehicles, washers, bins and waste-compacting units.
The negative news did not show in the company's shares, which have halved since January, with the stock closing 3.97 per cent higher yesterday at 78c.
The company, best known for its Cleanaway waste business, did not provide further comment outside its statement yesterday, but the impairment review is the first major market news since chief executive Kevin Campbell joined the company in January and chief financial officer Stewart Cummins took on the role in April.
Following the company update earlier this month, analysts had said debt remained a key issue for the company, with expectations of either asset sales or an equity raising to address the concern. The company has about $1.4bn in debt, with $480m maturing next year.
Transpacific, which has been punished by investors because of the substantial debt it carries -- as a result of the acquisition of waste management group Cleanaway just before the global financial crisis hit -- said yesterday it was in compliance with its banking covenants, adding that debt reduction was still its top priority.
Related Coverage Net loss looms for waste company Courier Mail, 9 hours ago Little wiggle room to escape dumpster The Australian, 9 hours ago Transpacific not ready for the bin Herald Sun, 12 hours ago NZ woes weigh on Transpacific Herald Sun, 17 hours ago Transpacific warns of deep loss The Australian, 1 day ago
TPI Price at posting:
70.0¢ Sentiment: None Disclosure: Held
