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Asciano, Brambles, Toll: What to expect when they report

Rail freight, logistics and port operator Asciano (ASX: AIO) is due to release its full-year results on Wednesday, 21August. In June, Asciano released a market update that stated that “overall trading conditions for Asciano remain challenging” with management highlighting freight volumes linked to the domestic economy as under particular pressure.

Despite these challenges the company is expecting full year 2013 earnings per share (EPS) to be up over 30% pre-material items. This suggests EPS for FY13 of over 33.54 cents per share.

Pooling solutions provider Brambles (ASX: BXB) is expected to report its year-end results on Thursday, 22 August. So far this year the company has managed to grow revenues in the mid-single digits and has also announced plans to demerge its Recall storage business from its main pooling operations.

In early July, Brambles confirmed that it expects to meet its guidance for underlying profit (at constant exchange rates) of US$1030 million to US$1060 million. This compares with underlying profit in financial year 2012 of US$1009.7 million.

Investors should also expect to hear from global freight company Toll Holdings (ASX: TOL) on 22 August. Toll would appear to be the most affected of the three companies mentioned here by the weak freight environment, but its business is also under stress due to some shocking acquisitions made by previous management. These factors are possibly already reflected in Toll’s share price.

Toll management updated the market in July stating that although it would take an impairment in its global forwarding division of around $200 million, excluding this impairment, the company expects to post operating earnings of between $420 million and $430 million.

Foolish takeaway

A slowing domestic economy coupled with an anaemic global economy suggest growth rates for freight and logistics firms will continue to be under stress. While it is hard to see economic growth picking up substantially in the near term, over time the situation is bound to improve.

Should current freight volumes turn out to be near cyclical lows, selectively purchasing undervalued logistic companies at this point could be a profitable move for investors.

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Motley Fool contributor Tim McArthur owns shares in Toll Holdings.

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