Here's the article l had tucked away malay, worth a read -...

Here's the article l had tucked away malay, worth a read - although some of it is long winded.
cheers

"Trying times with Transpacific turnaround".
February 22, 2015
Brian Robins
Fairfax
"It's a truism that effecting a business turnaround always takes longer than expected. And investors in Transpacific Industries are perhaps the living proof.
Two steps forward and one step back would be handy, although in Transpacific's case it sometimes seems as if it is the reverse, which is frustrating for the funds managers such as Perpetual who have bought into the recycling and waste management provider over the past several months now that progress has been made selling off assets and paying down debt.
But operational issues continue to derail optimism that the worst is now behind it.
The shares are a long way south of their peak of $14.56 touched in mid-2007. Equally, they are well clear of their more recent low of 52¢ – even after Friday's plunge to close down a hefty 12 per cent at 80¢ on poor December half earnings, which were derailed by the oil price slump.
On the way through, there have been more than $1 billion in share issues and another $1 billion-plus in asset sales – principally of its New Zealand arm, which had been acquired in the acquisition-fuelled spree of the founding managing director Terry Peabody as he aggressively hoovered up a host of waste businesses, including the Cleanaway arm of Brambles.
In fact that $1 billion raised over the past several years isn't far off its market worth at the close on Friday of $1.25 billion. Clearly after a huge amount of effort under successive chief executives over the past five years, getting the company to fire on all cylinders is the tough part.
The underlying premise that waste is a growth business is being challenged by the fact that while household waste continues to grow, the downturn in industrial and manufacturing has hit waste volumes from this key sector, which is weighing on margins. And the looming closure of the auto manufacturing and assembly industry in the southern states of Victoria and South Australia will see volumes in those two markets in particular take another leg down over the next two to three years.
And where there is growth – such as in Queensland thanks to the start-up of the series of export gas projects – so is there heightened competition. The family-owned J.J. Richards has a half interest in the new Northern Oil refinery in Gladstone, with the other shareholder, Southern Oil.
J.J. Richards also has a big chunk of Southern Oil's capital. Northern Oil has taken a big bite out of Transpacific's hydrocarbons units' activities in that important growth market. J.J. Richards was a 10 per cent shareholder (with board representation) when Transpacific went public a decade ago, although that stake is now believed to be only minor.
Woes in Gladstone, along with the collapse in the oil price, have squeezed margins of its hydrocarbon recycling business, while the lack of new contracts in the energy, minerals and remediation unit, where revenues are lumpy, hurt this division in the December half. Transpacific has the contract to clean up the old BP refinery on Bulwer Island in Brisbane, which will lift this unit through the balance of 2015.
But it is the Cleanaway division that generates the bulk of revenues and earnings, and the pressure is on to lift revenues and stem a steady slide in market share.
The waste collection business seems fairly straight forward – collecting waste and taking it to the rubbish tip. But with barriers to entry, competition from small players can be intense. Along with Transpacific, the other big players are foreign-controlled – Veolia and Sita.
Owning landfills plays a key role in lifting wafer-thin margins at a time of ongoing government pressure to lift recycling levels, which will boost capital intensity as the focus shifts over time to waste recovery investments.
In the December half, Transpacific paid Boral $165 million for the Western Landfill in Melbourne, which will help to offset the looming closure of the Clayton landfill late in fiscal 2016. That acquisition will be critical in lifting the so-called "internalisation rate" to around 65 per cent from 25 per cent at present.
In other markets such as Brisbane, South Australia and Western Australia, there are no such pressures, since its landfills there have a minimum of 10 years and up to over 50 years of life left. Speaking with analysts on Friday, Transpacific made it clear it is pushing its line managers hard to lift the internalisation rate given the impact this will have in boosting margins.
But the big question is what will happen in Sydney, where Transpacific's Erskine Park landfill is approaching the end of its life. It is estimated it has just three years left before it will close.
All waste groups in NSW have been hurt by the decision of the Queensland government in early 2013, not long after the previous Newman government came to office, to remove the $35 a tonne waste levy, which prompted a flow of waste from NSW into Queensland, to avoid paying the NSW waste levy.
With the largest volumes in the Sydney market, Transpacific will see margins shredded once Erskine Park is closed, in the view of many in the market. The pushback from Transpacific supporters is that it is increasingly placed to play both Sita and Veolia off against each other to squeeze prices. Sita has the Lucas Heights landfill in southern Sydney while Veolia has the giant pit at the former Woodlawn mine south of Goulburn. Veolia, too, is building a new transfer station at Banksmeadow, and will be in the hunt for extra volume to get a return on this outlay.
So closing Erskine Park, while a loss – and the focus of much near-term investor attention – is not a simple equation, given the ability to partly offset the impact by squeezing margins of both Sita and Veolia on the volumes going to their landfill.
"Bolt-on acquisitions" forms part of the revitalisation plan at Transpacific, but investor focus is narrowly on fixing the Sydney problem, which may chew up another chunk of capital.
Despite the complaints, the waste levy in NSW reflects the fact that there is an ongoing environmental cost to landfill, while it is also a lever to drive the industry to lift recycling. There are already some alternative processing centres in operation – none operated by Transpacific – that are not viewed as being uneconomic, although that may change in the future .
"It is one option, but it is a long way off," was the way one industry player put it."