Fliway updates earnings guidance, as cost position strengthens

Freight and logistics company Fliway Group [NZX: FLI] has lifted earnings guidance for its interim results by up to 20%, saying all its divisions are performing well.

Directors of the company, which listed in April last year, now expect earnings before interest and tax (ebit) for the six months to December 31, 2015 to be between $4.9 million and $5.2 million, an increase on the prospectus forecast of 15-20%.

Net profit after tax (npat) is now expected to be between $3.3 million and $3.5 million, compared with the March prospectus forecast of $2.9 million.

For the year to December, ebit is expected to be between $8 million and $8.3 million, an increase of between 12.5% and 16.5% on the prospectus, while npat is expected to be between $5 million and $5.2 million, compared with the prospectus forecast of $4.5 million.

Management reports to the NZX that all Fliway’s divisions traded in line or ahead of prospectus annual forecasts, and the “significant” capital investment in the company ahead of the listing is paying off, through lower operating costs and better capacity management. 

Fliway’s business comes from three parts – international freight, warehousing and domestic delivery, with more than 150 owned vehicles in the fleet.

Its domestic business runs through a ‘hub and spoke’ model, focusing on warehousing and logistics, mainly by courier vans and big rigs. Its international business operates ocean freighting and a customs brokerage, and the third division is its 50/50 joint venture with international logistics company UPS.

The company reports its cost position is strengthening, with net debt expected to be 25% to 30% lower than the prospectus forecast of $8.9 million. 

Despite this, management says the company is still experiencing softer revenues, due to lower fuel costs and international shipping rates, along with a “challenging trading environment.”

Managing director Duncan Hawkesby said at the October annual meeting that depressed ocean freight prices are having an impact on international revenue and this will probably have more effect until some capacity from shipping lines comes out of the market.

The company’s unaudited results for the six months to December will be announced on February 23.

Its share price moved 13.5% on the announcement to $1.09. Its initial public offer price had been set at $1.20.