The refrigeration logistics business has been a problem child for the company sucking away capital and management time to restructure and make it profitable. The company says it intends to explore capital management initiatives to maintain an efficient balance sheet and minimise its overall cost of capital. This implies a potential pay down in debt and a possible return of funds to shareholders, while no details are provided it could come in the form of a share buyback or a special dividend. This good news is however offset by a trading update.

The company provides a trading update for fiscal 2018, which is disappointing, consensus is looking for the company to deliver NPAT growth of 4.2% for fiscal 2018, the company says "As expected, trading in the first four months of FY2018 has been impacted by the regulatory changes to insurance income and continued weakness in the Western Australian market, offset by the strong start in Refrigerated Logistics. Operating NPAT at the end of October was down 3.1%. "

The company's prior guidance was for a modest uplift in earnings for FY18. They now say the consolidated outlook for FY18 is dependent on the timing and completion on the sale of the Refrigeration Logistics business. We expect this will lead analysts to downgrade their near-term earnings expectations from a modest uplift to flat earnings growth.

Tim Montague-Jones | Head of Australian Equity Research