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Mainfreight Annual Net Profit Before Abnormals $40m

Fuseworks Media
Fuseworks Media

Wellington, May 28 NZPA - Transport group Mainfreight reported full year net profit before abnormals of $40 million, almost on a par with the previous year's record of $40.8 million.

Total revenue for the year to the end of March increased by 38.8 percent from the previous year to $1.27 billion, representing a 28.8 percent rise when foreign exchange is excluded. Organic growth, excluding foreign exchange and acquisitions, improved 5.5 percent.

Net profit including abnormals fell 65.1 percent to $35.5m from $101.6m the previous year.

Mainfreight said it continued to find growth across all its markets, but in the second half of the financial year results faltered as economies around the world slowed and freight volumes deteriorated.

Sales revenues from outside New Zealand were 68.1 percent of the total, and would continue to grow in significance.

Trading into the first quarter of the new financial year continued the trend seen in the second half of the latest year, the company said today.

It expected volumes to continue to decline for the immediate future, affecting profitability in the coming year.

"Our response is to manage our business through very strong margin and cost focused branch management, coupled with sales strategies aimed at increasing market share across all sectors."

Mainfreight said it remained focused on growing its logistics network around the world.

The strategy had resulted in an expanded customer base, leaving the company well positioned in all its markets to take advantage of any upturn in the economic cycle.

A full year dividend of 18.5c per share will be paid, compared with 18c last year.

Staff had sacrificed annual salary reviews and bonuses this year, the company said.

"Team bonuses, while discretionary, have long been an integral part of our Mainfreight culture and accounted for $9.02m in pre-tax profit for the prior year."

Since last September the hiring or replacing, where possible, of people across all operations had ceased, with team numbers declining by about 250 people due to natural attrition.

Capital spending had been reduced across all sectors including placing on hold property development of $59.6m, Mainfreight said.

The exiting of surplus leases, particularly warehouses in Australia and this country, incurred a one-off cost of $4.1m after tax in this year's result.

In New Zealand domestic operations earnings before interest, tax, depreciation and amortisation (ebitda) improved by 11.2 percent to $41.6m on revenue growth of 4.8 percent to $294.8m.

In New Zealand international operations revenues rose 4.2 percent to $108.3m, but ebitda declined 0.4 percent to $4.9m as margins and rate levels, particularly in seafreight, remain suppressed compared to previous years.

In Australia import volumes declined steadily through the year as retailers reduced stock holdings, particularly from Asian suppliers.

Domestic operations in Australia had revenue increases of 23.2 percent to $183.2m, while ebitda declined 39.1 percent to $7.2m.

"While our market share continued to improve, volumes and consignment size deteriorated, particularly in the second half of the year, with margins and selling rates adversely affected."

Australian international revenues increased 44.5 percent to $209.4m helped by the acquisition of Halford International, while ebitda declined 8.9 percent to $7.1m as additional costs were incurred with the acquisition and against an environment of declining freight rates.

Mainfreight USA had now traded some 18 months under Mainfreight's ownership, and in the latest 12 months revenues were $265.8m and ebitda reached $4.2m.

"These results are well below our expectations and are poor at best," the company said.

CaroTrans' revenues rose 43.1 percent to $178.2m, with ebitda up 75 percent to $13.6m.

Mainfreight shares were down 10c to $4.80 in the first few minutes of trading today, having climbed from $3.28 in early March but still well down on the $7.45 last June.


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