all IMO only...thank god for the cleanaway business - its 6%...

all IMO only...

thank god for the cleanaway business - its 6% revenue on FY11 saved the business from virtually zero growth.

however, when you look at the figures in light of last year, this is a really poor result and a huge warning sign that this business is in real need of a major restructure/internal alignment or a complete breakup. i'm backing the latter in the next few years.

with the floods and cyclones last year, earnings were hit, therefore any revenue increase for the solid business this year isnt that fantastic. negative revenue growth in industrials really means zero or slightly positive growth, given the extra business they scored last year from the floods cleanup etc.

the large revenue growth in commercial vehicles can be attributed to better economic conditions, when you compare it to last FY. I'm sure they went into damage control at beginning of FY12 and implemented some initiatives to stimulate growth, so maybe give them a pass mark for that.

after manufacturing is sold this year (at a loss), then you either sell off other non-profitable divisions at a further loss, or you sell cleanaway and reduce debt to sustainable levels and concentrate on whats left of your core business. dont even get me started on how poorly teh NZ business is going.

no time to go into detailing the story of reduced margins, however note that increases in recycling services and lower commodity prices means cleanaway are taking less waste to landfill, which is where the fatter margins are.

all up, there are assets here that were bought in such a frenzy they paid top dollar, which were devalued last year significantly. even with the debt restructure, debt levels are still too onerous, particularly when all but one of the businesses is turning consistent revenue growth (albeit small) - yet EBIT and margins remain poor.

the structure of the business has been non-existent before last year, and Cleanaway continues to struggle with no apparent direction from senior management - appointment of a MD today raises a huge flag for me that they are preparing it as a stand alone business, in order to sell it.

all up, a $2b turnover business delivering NPAT of $58m, IMO, is pisspoor. whilst debt is lower, paying $46m a year off $1.17b makes for a lot of interest and long payback period for your financiers - cant see them patiently waiting for 20 years to get their payback - likewise key investors, who have debts themselves and require a return on investment in our lifetimes.

i'm tipping a sellof of Waste NZ and then Cleanaway to wipe much of the debt. hopefully by then both are worth something, as TPI appear to be too big to grow enough to pay off the huge debt. whilst i hold, i have lost the faith in this to ever return to anywhere near its glory days, much less $2+ in the next 2-4 years.

all IMO only