K&S in good stead as outlook brightens for transport sector
The transport industry remains highly fragmented and with recent conditions placing financial stress on some players, there could be opportunities for K&S to increase its market presence, making it a stronger business as the cycle turns. The company has the headroom to make relatively large acquisitions without raising capital, and this could be a significant share price catalyst.
One of the impressive features of K&S Corporation’s 2012-13 performance was the 20 per cent increase in operating cash flow to a record $46.4 million. This stemmed from an increased focus on collections and working capital management within the business, resulting in the company entering 2013-14 with substantially reduced debt, representing conservative gearing of 17.6 per cent.
Importantly, management maintained the dividend at the previous year’s level, providing confidence that the company remains financially resilient as conditions remain challenging in the transport industry. Given the company’s strong balance sheet, this is likely to continue in 2013-14.
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