Toll Holdings warns of job cuts

TRANSPORT and logistics group Toll Holdings has warned it will cut jobs due to the poor performance of its global freight services business.

The comments came as the company announced a $200 million writedown on the value of its global forwarding business, which handles sea and air freight.

Conditions had deteriorated by more than expected in the last six months, the company said.

It is trying to slash expenses in the forwarding business, having already cut jobs - including closing a regional office in Zurich.

It aims to cut $15 million to $20 million in costs in 2014, and $40-$50 million longer term.

The division's largest cost base is its 5000 workers, managing director Brian Kruger told reporters.

"People understand that with the cost reductions a lot of them will come through labour number reductions ... clearly we try to manage as much of that as we can through natural attrition, but there will probably be some redundancies," Mr Kruger said.

Toll said the business had been impacted by a mix of soft demand for its freight services in a sluggish global economy, and competition from ship owners on the US-Asia route.

Toll offers distribution between countries for customers, but some larger customers are only interested in the sea journey and therefore deal with shipping companies themselves.

The global forwarding business, one of six segments within Toll, will post a loss of between $4 million to $8 million for the second half of the financial year, and a small profit for the full year.

He said Toll wanted to say involved in global freight forwarding services, and believed it was profitable, but would avoid any acquisitions for now.

Its sales staff were now concentrating on customers that were less attractive to ship owners and require its full services.

Despite the writedown, Toll reaffirmed its forecast for second half earnings of between $420 million and $430 million.

Its shares added 10 cents, or 1.9 per cent, to $5.35, in line with overall market gains.

The global forwarding business generates 15-20 per cent of Toll's revenue, with the company's other segments including logistics for mining companies, express and overnight parcel services and domestic freight.

The $200 million writedown on the global forwarding business is a non-cash impairment of goodwill, but it will push up Toll's debt to equity ratio.

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