Fliway increases dividend as revenue growth stalls

Fliway Group [NZX: FLI] declared a final dividend at the top end of its payout range, rewarding shareholders during a period when challenging conditions in international transport markets hurt revenue and left the transport and logistics group having to cut costs to lift earnings.,

Profit rose to $5.6 million in the year ended June 30, from $2.19 million a year earlier, Auckland-based Fliway said in a statement. Sales fell 1.8% to $82.6 million.

Fliway, which listed in April 2015, declared a final dividend of 5.35 cents a share, up from 2.8c a year earlier, bringing total payments for the year to 8.65c , at the top end of the 50-70% of profit it aims to return to shareholders each year. At the pre-open share price of 95 cents, the annual dividends amount to a gross yield of 12.6%.

"That's a very attractive yield in this market," chairman Craig Stobo told BusinessDesk. The payout ratio will remain in place for the 2017 year.

Dividend payments beat market consensus of 8.56 cents for the year. The stock jumped 14% to $1.08, though still down from its $1.20 initial public offering in April last year.

The company didn't give guidance for 2017 although Mr Stobo said it will focus on cost control while working to strengthen existing customer relationships, making acquisitions and pursuing work in new sectors. In June the company said it lost a major customer, which would hurt revenue and earnings in 2017.

"While we continue to experience softer revenue we are aggressively managing costs to protect the profit position," Mr Stobo said. The company hasn't identified the customer and Stobo wouldn't be drawn on it today, other than to say the loss came "out of the blue." It accounted for about 10% of Fliway's earnings before interest, tax, depreciation and amortisation in the 2016 year, it said in June.

"We're always on the hunt for new customers," he said. Still, "it's a large loss to fill."

Revenue fell in the latest year as a result of a "reduced fuel adjustment factor" and the loss of Dick Smith Electronics as a customer in the domestic division while depressed shipping rates and lower freight volumes affected the international business, Fliway said.

Domestic revenue fell 0.2% to $55.7 million and earnings before interest, tax, depreciation and amortisation gained 21% to $10.2 million. In international, sales fell 4.9% to about $27 million and ebitda dropped 7.7% to $3.6 million. The outlook for international remains challenging, it said.

Net debt fell 30% to $5.8 million while operating cash flow rose to $6.7 million from $5.7 million. Capital spending fell to $2.6 million from $4.6 million.

"Fliway's increased balance sheet strength provides considerable headroom on all banking covenants," the company said.

Fliway transports and warehouses freight throughout New Zealand and coordinates freight movements internationally, including customs clearance. It has 400 staff, 170 vehicles in its fleet, and 15 sites nationwide. It also owns half of UPS-Fliway, a joint venture its had for the past 17 years with UPS, one of the world's largest package delivery companies.

(BusinessDesk)

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