Ferret's Stock to Watch: BOOM LOGISTICS LIMITED 09:08, Thursday, 15 February 2007
A BIG RESULT BUT CEO IS LEAVING TO PURSUE OWN INTERESTS
Sydney - Thursday - February 15: (RWE Aust Business News) *********************************************************
OVERVIEW ********
Shares of Boom Logistics Ltd (ASX:BOL) yesterday took a dive after a result that should have lifted confidence in the market.
The company reported a net profit of $19.59 million for the half year to December 31, up 25 per cent on the prior comparative half, and increased interim dividend to 5.7c against 5.2c a year earlier
Revenue was up 40 per cent to $170.45 million.
Boom's chief executive Rod Harmon said the continued growth in profit reflects the success of acquisitions and the benefits of increased scale and service offering.
At the same time of the profit statement the company announced that CEO Rod Harmon will retire on June 30 to pursue business interests within the IT industry.
What shareholders dislike are changes when business is doing well.
Boom Logistics chairman, John Robinson, said Mr Harmon has done an outstanding job in his role as CEO.
"Boom has grown significantly under his direction and has become an industry leader in its field," Mr Robinson said.
"Rod has created scale and value through the integration of 21 acquisitions since Boom's inception.
"The company today has a broad customer base across a range of industries and is the only national provider of lifting solutions.
"Under Rod's leadership our financial performance has been excellent and this has been reflected in both the absolute and relative performance of our share price."
Mr Robinson said the company extended its thanks and very best wishes to Mr Harmon in the pursuit of his new business interests.
Finance director Mark Lawrence will succeed Mr Harmon as chief executive officer on July 1.
"Mark has been a member of the executive team since the company was formed and his appointment as CEO is a planned and natural transition," Mr Robinson said.
"He has played a leading role in major acquisitions and been a key driver of the business development activities that have underpinned the company's growth and success.
"Mark Lawrence brings strong financial, strategic and leadership skills to the role and is supported by an experienced operational and business development team," Mr Robinson declared.
He confirmed there would be a progressive handover of responsibilities from Mr Harmon to Mr Lawrence over the next five months.
During this time a replacement CFO will be appointed.
Boom Logistics recently appointed Brian Praetz as Chief Operating Officer and Jim Carr as Business Development Officer.
Mr Praetz has been with Boom Logistics since August 2002 and was previously the Boom WA General Manager.
Mr Carr was appointed to the role of General Manager Business Development in August last year having previously held senior development roles with Pioneer.
In commenting on the latest results Mr Harmon said, "Integration of the James Group is progressing well and has enabled us to extend our customer service offer and provided another platform for future growth.
"We are continuing to see strong demand from our existing customers and we're also seeing a significant increase in the demand for bundled services.
"We are uniquely positioned to deliver this broader product offering, and as a result we are being awarded an increasing number of national contracts.
"We continue to see numerous opportunities for growth," Mr Harmon continued.
"Our focus is on both organic growth and selective acquisitions that will extend our national presence and deepen our service offer to increase our market differentiation."
He said the outlook for the remainder of the year was positive and performance in the second half will be driven by strong demand from customers across each of the core industry sectors in which Boom operates.
SHARE PRICE MOVEMENTS *********************
Shares of Boom Logistics yesterday fell 58c to $3.80. Rolling high for the year is $4.89 and low $3.51. Dividend is 10.4c to yield 2.74 per cent. Earnings per share is 21.8c while p/e ratio is an attractive 17.43. The company has 170.6 million shares on issue with a market cap of $648.2 million.
Ferret has been following this company since it floated in 2003 and has been impressed by its expansion strategies and earnings potential.
Mr Robinson told shareholders at the annual meeting that considerable progress had been made in implementing the company's business development strategy and new avenues for future growth had been opened up.
Summarising Boom's achievements over the past year, the chairman said the most significant step during the period was completing the acquisition of Sherrin Hire in August 2005.
The inclusion of this business not only made a substantial contribution to financial performance, it also effectively doubled the size of the workforce and the number of service centres across the country.
Most importantly it had provided a new platform for future growth, with opportunities to integrate new lifting and access services into a broader offering to its customers.
"We continue to develop these opportunities and the benefits are expected to accumulate for some time to come," the chairman told shareholders.
"Our first initiative for the new financial year was announced in August with the acquisition of the James Group.
"This increases the size of our "Dry Hire" business by some 70 cranes, but importantly it also comprises a new and used crane sale business, through the sole Australia wide Tadano crane agency.
"Consequently, this acquisition has strategic importance beyond its immediate contribution to the company's financial performance, as like the Sherrin Hire business it offers new avenues to future growth," Mr Robinson said.
"Although, as in the previous year, business acquisitions have been the primary source of company growth we have also generated organic growth of around 13 per cent in the past.
BACKGROUND **********
Boom Logistics is a leading Australian lifting solutions company with a pivotal position in the burgeoning industrial maintenance, commercial construction and resources sectors.
The company was formed through the vision of long-term participants in Australian crane hire who identified an opportunity to gain substantial market share through corporatisation.
Boom has acquired twelve established crane hire businesses across Australia with long track records of success to form a national lifting solutions group with a strong market presence.
The logistics group sells a range of lifting services including:
* Managed Lifting Solutions;
* Contractual Maintenance Arrangements;
* Crane Integration for High Rise Constructions;
* Engineering Services and Maintenance;
* Logistics & Transport;
* Equipment Hire.
Traditionally the industry has been fragmented, with the majority of crane hire businesses privately controlled and serving a small range of local customers.
The broad range of industry sectors served by Boom provides the company with a natural hedge against volatility in any one of those sectors.
Boom is recognised for its commitment to the highest standards in occupational health, safety, environmental management and quality assurance.
Main areas of activity include:
* Mobile cranes - hydraulic cranes for short-term lifting requirements;
* Tower cranes - permanent, on-site, high-rise construction cranes;
* Project cranes - large scale, limited-mobility construction cranes;
* Access equipment - platforms, boom lifts.
Boom operates from bases in Victoria and Western Australia, and covers five Australian states and offshore at petrochemical industry facilities in Bass Strait.
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