Not-so toxic-free profit result for Tox

Waste management company sees record profit results, but all is not as it may seem

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 14, 2013 3:05 pm AEST

Tox Free Solutions (ASX:TOX), a company that provides industrial services, mainly associated with waste management, has reported a record profit result for this financial year.

Tox saw revenues up 37% to $285 million, while underlying net profit for the 2013 financial year came in at $21.7 million, a 26% jump over the previous year's result. While the company announced an increased dividend of 5 cents, compared to 4 cents in 2012, there were a couple of negatives.

Net debt to equity has risen to 41%, from 30% a year earlier, while statutory net profit was down 13% to $13.6 million, after one-off adjustments. Borrowings total $113 million, with $23 million of cash in the bank.

Tox said it faced difficult trading conditions in a number of sectors with some maintenance and infrastructure projects deferred during the period, particularly in manufacturing and infrastructure sectors.

On a positive note, the company said its recent acquisition of Wanless Enviro Services and Smart Skip in Queensland provided an opportunity to expand its waste management services to regional resource areas, as well as further diversifying the company's services across a wider range of industry sectors.

Foolish takeaway

Waste management and disposal is likely to become an increasingly more important role that has to be undertaken by businesses. Tox Free is perfectly situated to take advantage of that trend, although it could face some competition from the likes of Programmed Maintenance Services (ASX:PRG), TransPacific Industries (ASX:TPI), and smaller players such as CO2 Group (ASX:COZ).

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

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