Little’s long road

Paul Little’s long tenure as Toll Holdings chief has come into focus

Paul Little pleasantly surprised the market on August 26 when he delivered the annual financial results for Toll Holdings, the freight and logistics company he has been chief executive of since 1986.

Little announced earnings before interest and tax of $434.6 million for Toll in the 2010 financial year, up from previous guidance of between $402 million and $412 million. Ironically, Toll shares were smashed when Little downgraded that guidance from $420 million in June. Toll shares rose after the results announcement.

Though Little is confident in the company’s outlook - he said a series of acquisitions in Asia in particular, set the company up well for the current financial year and beyond - there are questions about his future.

The sharp focus put on long-serving chief executives in the wake of arguments over when the long tenure of Leighton Holdings chief Wal King (who took on the top role at Leightons a year after Little started his at Toll) will end and what succession plan he has in place, has turned the spotlight on the likes of Little.

An article in The Australian Financial Review in early August pointed out that Little, 62, presided over a company that managed compound growth of 45.6 per cent in the 10 years to 2007 but who has struggled in comparison to that heady decade since. There are question marks about the Asian acquisition strategy, with some pointing out that economies of scale are hard to achieve in the region.

Little is having none of it and says growth in Asia will outstrip that on offer in Australia, where retail conditions will keep growth in the first half of the financial year soft.

He played a straight bat to questions at the results briefing about his tenure, too, saying: “There are always questions [from shareholders] about succession plans...and that is quite appropriate. But I am still governed by the terms of my contract...and at this stage I am in the same situation as I have been in for the past 20 years.”

Rumour has it that Little will leave his post only to step up into the chairman’s role at Toll. Several high-ranking Toll executives, such as Asciano chief executive Mark Rowsthorn and others such as former chief financial officer Neil Chatfield, have left in recent years supposedly frustrated at not getting a chance at the top job.

Little says Toll’s succession planning is “strong”. Investors are watching closely to make sure that is the case.

BRW

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