Japan Post trashing Toll Holdings’ legacy: Paul Little

Paul Little has broken his silence on the demise of the logistics company under Japanese ownership.

Former Toll Holdings boss Paul Little: ‘Toll’s legacy has been trashed’.

Former Toll Holdings boss Paul Little has broken his silence on the demise of the company under Japanese ownership, claiming its legacy has been “trashed’’ and that Toll urgently needs to look at changing its culture if it is to survive in the increasingly cutthroat global logistics market.

In an interview with The Weekend Australian, Mr Little also said he was deeply upset by the job cuts that had already occurred and were to come after Japan Post paid a bumper price of $6.5 billion for Toll in 2015.

The Japanese firm revealed this week that it would book a $US3.6bn ($4.8bn) writedown on Toll and said a new management team would reduce its operational business units and slash 1700 jobs, the majority of which were likely to be in Australia.

It said a strategic review over the past three months had identified target markets for organic growth and areas where the business needed to reduce complexity and overhead costs.

“I left Toll the best part of 5 ½ years ago and had no involvement in the acquisition by Japan Post,’’ Mr Little said.

“Since that has happened a number of my quite close friends at senior management levels have lost their jobs. That has been right in my face. They were loyal and extremely well respected from an industry point of view. The way they were removed from the company, it has happened so fast and without a lot of compassion. I find that personally quite upsetting.’’

At its peak under Mr Little’s reign, Toll’s market value reached $8bn and it had 50,000 employees. He introduced an employee share scheme so the staff could directly participate in the growth of the company.

But Toll was criticised for its growth by acquisition strategy under Mr Little, which saw it expand quickly into Asia but subsequently resulted in some write-offs and asset sales. He stepped down at the end of 2011 and was replaced by Brian Kruger.

In January, Japan Post appointed ex-Linfox executive Michael Byrne as Toll managing director and Telstra chairman and former Asciano chief executive John Mullen as the executive chairman.

Since his departure Mr Little said the culture inside Toll had from a changed from a “can-do culture’’ to one of “cost cutting and disposal of assets and shrinking the business’’.

“Toll’s legacy has been trashed — it has gone from being a strong, proud and aggressive group to one that is being forced to undergo major surgery with retrenchments and a major restructure.

“And I believe that is the result of its culture,’’ he said. “The company needs to look closely at changing its culture because the only way it will survive after this restructure is with a strong growth program.

“Toll is not a yield play, Toll is a growth play. Logistics now is a global playground and you need to have global cross-border capability to survive.’’

Mr Little also revealed he had offered to be involved with the company under Japanese management but was rebuffed.

He made $340 million from the Japan Post takeover when he sold shareholding of just under 5 per cent in the company into the Japanese bid and at the time talked up the benefits of the deal.

While he acknowledged he had been a significant beneficiary of the inflated price of the deal, he added: “There is not much I can do about the fact that Japan Post overpaid for the company and I had a reasonable shareholding.’’

Japan Post will now pursue a “One Toll’’ vision for the operations of its embattled Australian subsidiary after revealing its estimated earnings before interest and tax would be only $69m in 2017 compared to a budgeted $408m, which was up from $266m in 2016.

Under a new reporting and governance structure, approval will now be required from Japan Post for Toll to undertake “material matters’’, while some key executives of the group will relocate to Australia.

But Mr Little said: “The Japanese need to empower the Australian management if they are going to turn Toll around into a successful corporation.’’

It is understood Japan Post head of global logistics strategy Hiroshi Shiraishi, one of the architects of the Toll acquisition, will relocate to Melbourne midyear to assist with the running of the company.

Mr Little, who has been in the transport industry for most of his business life, now oversees his private company Little Property. He also runs his own private jet charter group, Little Aviation.