Fliway lifts first-half profit 60%, beating forecast; shares jump to a record

Fliway [NZX: FLI], the listed transport and logistics group, increased first-half profit 60% as a reduction in costs offset weaker revenue. The shares jumped to a record.

The Auckland-based company said profit rose to $3.6 million in the six months ended December 31, from $2.2 million in its pro forma financial results from the year earlier, to deliver a result that was 25% above the prospective financial information provided ahead of its April 2015 listing on the NZX. Revenue for the half slipped 1.2% to $43.8 million, compared with the same period a year earlier.

Fliway's shares touched a record $1.10 and were recently up 2.8% to $1.09.

In its domestic division, the transport business unit improved operating costs and moved into its new Christchurch site, which delivers a larger and more efficient transport dock while the warehousing business will gain an additional 2000 square metres of space in the building.

"The company has continued to demonstrate earnings growth via payback on capital expenditure invested and continued improved capacity management in the domestic business unit, in the face of a challenging trading environment," chairman Craig Stobo said.

The company said volatile pricing on shipping rates and lower volumes meant the international division dropped revenue more than expected during the half and this is expected to continue for the rest of the year. Its UPS-Fliway joint venture contributed strongly to the group result, with revenue growth ahead of forecast and the payment of the first half dividend expected in the second half.

It will pay an interim dividend of 3.3c  per share on April 20.

Managing director Duncan Hawkesby said while it was satisfying to get significant earnings growth in the first half, the outlook remains challenging for the rest of the year. His comments are in line with a cautious outlook expressed by Freightways and Ports of Auckland when reporting their first-half results this week.

"There is general volatility in the market and that's having an overall effect on confidence," Mr Hawkesby said. "We have some retail exposure and some customers supporting agriculture and those guys are doing it tough."

During the half, a trust associated with Mr Hawkesby and his wife, Gretchen, who were the selling shareholders in the IPO, settled a $590,000 claim relating to a former logistics customer. As part of the sale, the Hawkesbys indemnified Fliway from any loss of earnings up to $4 million as a result of a third party claim relating to events before the IPO. Mr Hawkesby said Fliway didn't end up paying anything as a result of the claim while the indemnity reduces annually to nil in 2020.

(BusinessDesk)