Refrigerated Logistics (RL), a bundle of transport and storage centres spread throughout the nation, posted a 51.6 per cent plunge in earnings before tax for the four-month period from July to October 2016, according to data released at AHG’s shareholder meeting held in Perth last week.
AHG managing director Bronte Howson has recently denied the division was up for sale, but in an interview with GoAutoNews Premium, softened his opinion.
“We acquired it (Refrigerated Logistics assets) in 1986,” he said. “In the mid-1990s we were struggling to decide to expand or contract or sell.
“We redeveloped it from 1996 and I see the absolute benefits and sustainability of the model.
“But we have to get the return back to the shareholders. I think if it was my company I‘d keep it. But we have to give value to shareholders.
“Personally, I think it’s a strong part of the company but if we turned that money into the auto business then we could have a big return,” he said.
Mr Howson said that “the reality is that we have to do a better job”.
“It is a leverage strategic asset and now we have to turn that into making the business better,” he said.
AHG CEO and incoming managing director John McConnell told GoAutoNews Premium that RL “has to drive the best return for the shareholder.
“This is nothing to do with outsiders (analysts),” Mr McConnell said in his first interview as the head of AHG.
“From our point of view, there has to be advantages in what we do.
“At the end of the day, we accept that RL is a unique asset and all unique assets have value.”
Mr Howson said that RL accounted for about $1 billion of AHG’s revenue which added to the diversity of AHG’s income spread and that it would be “handy if we have headwinds coming”.
He said talk of the sale of RL were rumours, however he did not discount these out of hand.
“If we get fair value for RL, to get value for the shareholders, then we have to look at that,” he said.
Asked if he had people interested in buying RL, he said “there are people who come in and out” of negotiations.
“There was a recent article that sounded like we were selling it (RL) and we had a rush of people saying ‘pick me, pick me’,” he said.
“Yes, we were contacted after that article was published.
“It is a valuable part of our business. I would say, if we were serious, we would be inundated from overseas companies because of the way food is being shifted around the world.
“People will need storage – just look at the introduction of Aldi in Australia – because there are lots and lots of products coming in and going out of Australia and we have the infrastructure.
“We have the largest refrigerated storage facilities throughout the country from Far North Queensland right down around the coast.”
Mr Howson told shareholders last week that RL was going through a transition.
Part of this transition was finalising a long-winded internal restructure that applies one IT system to its various business elements.
“We are two years behind (of the RL restructure) because of the IT problems,” he said.
“We could have been in a far better situation if we had solved that two years ago.
“It is unfortunate that the IT business has been delayed for two years but now we have the warehouse and management systems in place and they will start delivering in the first quarter of 2017.”
AHG appointed Stephen Cleary in February as the new CEO for RL which also interacts with other AHG divisions, including the use of the company’s expansive truck retailing and servicing operations.
By Neil Dowling
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