Toll Group takes $200 million impairment hit

It doesn’t always pay to be optimistic. Toll Group (ASX: TOL) announced Thursday that it is taking a $200 million goodwill impairment on its Toll Global Forwarding division. Goodwill is a form of intangible assets, often reflecting strong brands, employees, and/or customer relationships. After reviewing its forwarding division, Toll Group’s board voted to write off its positivity due to deteriorating market conditions that have hindered growth and squeezed margins.

“While we still see global forwarding as an attractive market longer term, this impairment decision reflects the combination of current weak market conditions and uncertainty over the timing and extent of any recovery,” said Toll Managing Director Brian Kruger in a statement. “We are focused on the areas under our control, driving cost reductions and productivity improvements even harder.”

Despite the $200 million dip, Toll Group also reconfirmed its FY 2013 operating earnings guidance between $420 million and $430 million. Looking ahead, Kruger noted: “For the foreseeable future, our focus will be on driving costs out of the business and we will not look at further acquisitions in the global forwarding market until we are able to demonstrate improved operating performance in this division.” The company will discuss its 2014 guidance during its final FY 2013 results announcement on 22 August.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.