DSO 2.9 ⇑

DIO 3.6 ⇑

DPO 8.5 ⇑

DWC 1.5 ⇑

A reversal of recent trends with an increase in average DWC driven by higher DSO and DIO, despite a lengthening of average supplier payment cycles (higher DPO).

Whilst our sample of Transport & Logistics companies reported only a slight uplift in average full year revenues in 2021, there was a marked increase in activity in H2 2021. Not only were H2 revenues 10% higher on average than H1 2021, they were higher than the previous three half-year periods. This was driven by the continued COVID-related growth in online retail, along with a higher demand for bulk and containerised haulage due to increased mineral resources, grains and other agricultural exports. Over 70% of the sample also achieved improved margins and EBITDA growth in 2021.

Average DWC increased by 1.5 days to 30 days in 2021, although there was a mix of outcomes across the sample with 55% of operators actually shortening their net working capital cycles. Interestingly, all of the sampled companies that were able to lower their DWC did so by paying their suppliers more slowly in 2021 (higher DPO). Across the sample, average DPO increased by 8.5 days (relative to 2020). This reversed recent trends and appeared to signify a shift in the competitive positioning, especially for the traditional transport and freight operators, which also translated into more favourable pricing, margins and payment terms.

Notwithstanding the above, the average DSO and DIO of our sampled companies increased by 2.9 days, and 3.6 days, respectively. Again, this was a reversal of the improvements reported in 2020, suggesting some relaxation of the tighter collection and inventory management processes put in place in 2020 signalling a shift in competitive positioning for Transport operators (linked to increased demand from Retail, Agriculture, and Mining & Resources customers).

Looking internationally, Australian operators appear to manage working capital well when compared with their overseas counterparts. This is particularly the case for Asia and Europe where longer customer collection cycles and shorter supplier payment cycles resulted in average DWC metrics that were 10 – 20 days higher than Australian averages in 2021.

In terms of the sector outlook, demand for online courier services is expected to remain high (even as ‘bricks and mortar’ retail recovers post COVID). From a logistics viewpoint, the return to domestic manufacturing in some sectors is expected to heighten the need for additional storage, automation and general supply chain management.

Note: airlines were excluded from our sample due to the contrasting nature of their working capital cycles (often negative) and the size and scale of their operations (which disproportionately skew the sample set).

“Operating cash flow up 5.7% reflecting higher EBITDA, lower remediation costs and working capital movements.”

Cleanaway Waste Management Limited
FY21 Full Year Results Presentation


COVID-19 Impact

Net working capital performance

Cash Impact ($'m)*

*A positive cash impact is a “release” of cash from working capital (improvement). A negative cash impact is additional cash invested or “locked up” in working capital (deterioration).

Transport & Logistics - Financial Year
Days 2020 2021 Change
DSO 38.8 41.7 2.9
DIO 53.1 56.7 3.6
DPO 84.6 93.1 8.5
DWC 28.5 30.0 1.5
Transport & Logistics - Half Year
Days H1 2021 H2 2021 Change
DSO 44.8 40.5 (4.3)
DIO 52.5 55.3 2.8
DPO 90.7 91.2 0.5
DWC 30.8 28.9 (1.9)
Best & Worst
Days Best Worst Spread
DSO 16.1 58.8 42.7
DIO - 208.8 208.8
DPO 154.1 31.8 (122.3)
DWC (31.9) 104.6 136.5
International Benchmarking
Days AU Asia EU US
DSO 41.7 51.9 58.7 47.2
DIO 56.7 34.9 46.7 36.0
DPO 93.1 38.4 73.2 67.5
DWC 30.0 49.4 40.3 26.2