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Mainfreight Cautious At First-Half, Still Frustrated With Rail

Fuseworks Media
Fuseworks Media

Wellington, Nov 19 NZPA - Mainfreight continues to be disappointed at the Government's attitude and commitment to rail freight services in this country.

The logistics company believes it is among Kiwirail's top five customers and would double its spend if it got the right rate and services.

"We don't seem to have a lot of dialogue with (Transport Minister Steven) Mr Joyce on what our thoughts are on rail and would like to have more," Mainfreight managing director Don Braid said.

Mainfreight and other logistics companies have always suspected that Toll NZ, which is the rebuilt former land transport business of Tranz Rail, gets a better deal on rail even after rail was sold back to the Government.

Mr Braid said some ground had been made on the issue but the truth would probably never be known.

Mainfreight today reported a 36.5 percent fall in half year profit to $10.9 million, even as conditions in all markets where the company operates were "much improved" in the second quarter.

For the six months to the end of September, Mainfreight's trading revenue fell 14.3 percent from a year earlier to $535.8m, while net profit before abnormals dropped 29.3 percent to $12.2m.

"Importantly, second quarter performance saw revenues and profitability improve markedly from our first quarter's results," Mainfreight said.

Direct comparisons showed revenues up 4.8 percent and ebitda (earnings before interest, tax, depreciation and amortisation) up 50.5 percent.

While seasonality of freight volumes was a contributor, trading during the second quarter had seen a general improvement which continued into the third quarter, the company said.

"We welcome the upturn but remain cautious about overall economic conditions in each country where we are located."

Trading during October and November indicated further improvements likely for the third quarter, Mainfreight said.

"We believe that the market will be fragile for the first quarter of calendar 2010, therefore we remain focused on improving margins and sales growth with strong sales campaigns."

An interim dividend of 8.5c per share is to be paid.

In the New Zealand domestic division, ebitda declined 14.5 percent to $14.5m compared with the same period last year, but September 2009 month ebitda exceeded that of September 2008 by 9.8 percent. Sales revenues fell 16.4 percent to $128.4m, down $25.2m from a year earlier.

Domestic freight volumes were rising with increased market share assisting revenues.

In the Australian domestic division ebitda was up 41.5 percent to $6m, while sales revenues fell 4.7 percent to $90.6m.

Warehousing volumes had been strong through September and October as suppliers to retail built stock volumes for Christmas, Mainfreight said.

In the United States , trading continued to be difficult in both the domestic and export sectors. Even with a weak US dollar, export volumes had declined from their peaks at this time last year.

Total revenues fell 24.7 percent to $164.7m, while ebitda for the region was $3m down from $8.4m in the year prior.

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