INTERVIEW: Jeff Khoury, Toll Global Forwarding

Executive talks about Toll Group's recent Middle East acquisitions.


Following a string of recent acquisitions in the UAE, Toll Group has moved a step closer to becoming a leader player in the Middle East logistics industry, explains regional managing director Jeff Khoury.

As one of the biggest players in Asia’s logistics industry, how important is the Middle Eastern market to the Toll Group?
In terms of geographical location, the Middle East is ideally positioned between two of our key markets, Asia and Europe, so it’s been flagged as a very important region. By developing our presence over here and expanding the necessary infrastructure, the Toll Group has been able to better service our customers on a global level, as well as a region-wide level. We have become more and more active in the Middle East through the fulfilment of our expansion strategy, which has focused on organic growth, as well as key acquisitions in the region. Currently, Toll Global Forwarding operates 10 facilities in the United Arab Emirates alone.

Why has the Toll Group focused more on local acquisitions to develop its presence in the Middle East logistics industry?
We believe that acquiring a number of established businesses with strong reputations and customer bases was a quicker way to develop the Toll Group’s regional presence. In fact, this was not only a quicker solution than growing the business by pure organic growth, but was also a stronger way to grow, as we were able to tap into existing networks and knowledge. Over the last year, these acquisitions have allowed the company to fast-track its presence within the UAE in terms of sales and growth. As a result, we were firmly positioned as a strong regional player with further expansion plans throughout the Middle East.

A high-profile acquisition was the Dubai-based company LDS. Can you provide any additional background on that deal?
The acquisition of Logistics Distribution Systems (LDS) was completed in December 2009. The capabilities and positioning of LDS as a quality freighter forwarder in the trade lanes between Dubai and Europe, as well as Dubai and Asia Pacific, was attractive to the Toll Group. When combined with our existing operations, it helped to secure a global trans-shipment hub for freight movements between Europe and Asia. At the time, LDS operated from a central facility in Jebel Ali Free Zone and generated annual sales of around US$50 million, with 60% of the revenue coming from air and sea freight forwarding and the balance from customs clearance and other logistics services.

What other acquisitions have taken place in the Middle East since this time?
Well, there was the global acquisition of UK’s Genesis Freight Forwarding, which may not be based in the Middle East, but had an impact on our operations here as the company had a presence in the United Arab Emirates with a focus on the defence, aerospace and oil and gas sectors. In addition, we announced the acquisition of SAT Albatros, a Dubai-based provider of sea-air services last month.

What attracted the Toll Group to a firm such as SAT Albatros?
Developing our business with a niche provider of sea-air transportation services has allowed Toll Group to offer the opportunity to match speed-to-market with a cost-effective service. For customers that want to transport goods quickly but keep costs down, this integrated option can offer a significant cost saving over pure airfreight. The integration of SAT Albatros will allow us to secure a blue-chip customer base that principally consists of European fashion apparel, electronics, and consumer goods conglomerates.

Have the likes of LDS, Genesis and SAT Albatros been re-branded by Toll Group?
All of the recent acquisitions, including LDS, Genesis Freight Forwarding and SAT Albatros, will soon be rebranded in line with the rest of our organisation as part of a global corporate initiative.

Are there any plans for the Toll Group to make further Middle East acquisitions?
Our plans are to invest and grow in areas where we see opportunity. When it comes to selecting a company for acquisition, we are looking to find the right fit for the group, as well as a good match for the requirements of our customers around the world.

Has these acquisitions has any impact on the financial performance of the Toll Group?
For the second half of 2010, or between 1st July until 31st December, our net profits increased by a total of 53% to $166.5 million and revenues were up 28% to $4.3 billion, which means that we were able to achieve growth both organically and through acquisitions in a period of economic and environmental challenges.

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