Toll lifts first half profit by 21% TOLL Holdings says cost cutting and improving efficiency will drive earnings in its underperforming global freight-forwarding business in the near future. The transport and logistics group on Wednesday reported a 21.2 per cent lift in net profit to $192 million in the six months to December 31, from $158 million in the prior first half. Managing director Brian Kruger said Toll was not assuming any material improvement in economic conditions in the second half of the financial year. "All in all, while we've got a few challenges to manage, at this stage of the year, we believe we will deliver a second half operating result that is ahead of the same period last year," Mr Kruger said. Toll's first half result included a $52 million gain on the sale of its vehicle distribution, and refrigerated line haul and warehousing businesses. Toll also booked a $30 million impairment charge on its marine logistics operations in Asia. Toll's shares were 26 cents, or 4.62 per cent, higher at $5.89 at 1343 AEDT. Mr Kruger described the first half results as very credible, given ongoing challenging market conditions. "With Toll global forwarding, it really was a case of two steps forward, two steps back," he said. Higher revenues in global forwarding reflected higher ocean carrier freight rates, but ocean freight volumes fell due to lower demand. The division's earnings fell by $2 million. Mr Kruger said Toll had started building global forwarding four years ago, mostly by making acquisitions. The acquired businesses had different back-office processes and systems and only in the past six to 12 months had Toll turned its mind away from making another acquisition to improving the operating system and lifting productivity. We're well progressed with that at the moment. That is going to drive significant earnings improvements in global forwarding over the coming years," Mr Kruger said. Toll was continuing to look at bolt-on acquisitions in global forwarding but in the past six months had not been able to find the right acquisition at the right price. Mr Kruger said Toll was continuing to consider its options for the underperforming Toll global express business in Japan, otherwise known as Footwork Express but would not be pursuing a full sale of that business. "We do believe that there are partial restructures or other alliances with local Japanese companies that may provide an avenue for us to improve returns from this business," Mr Kruger said. A review of Toll Marine Asia, which transports thermal coal, had resulted in a decision to sell just over half of the business - vessels that were either just breaking even or making losses. We've already sold eight of those 38 vessels at pretty close to their book value. We expect to sell the balance over the rest of this calendar year," Mr Kruger said. The sales proceeds would be about $30 million less than their current carrying value - hence the writedown in the first half results.