Freightways fattens margins, lifts earnings in 'strongest first quarter' in a decade

Freightways [NZX: FRE], the listed courier and data management company, affirmed it is on track to lift 2015 earnings after recording the strongest first-quarter performance in a decade, widening its profit margin on a 17 percent increase in sales. The shares surged to a record.

Profit rose 37 percent to $13.4 million in the three months ended Sept. 30, from $9.79 million a year earlier, the Auckland-based company said in a statement. Operating revenue climbed to $122 million from about $105 million. The first quarter included five extra trading days that added $1.4 million to profit.

Freightways operates a suite of courier-related brands and said today that New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, Pass The Parcel, SUB60, Kiwi Express, Stuck and Security Express, "all delivered record results" in the first quarter. It attributed the gains to increased demand from existing customers and from winning market share. The company has lifted operating revenue and pretax earnings every year bar one in the past decade.

"Increased activity from existing customers throughout all geographies and industries in New Zealand has been further assisted by quality market share gains and some pricing improvement," managing director Dean Bracewell said in a statement. "The positive performance evident in this first quarter result underpins our expectation of year-on-year earnings growth in 2015."

Shares of Freightways rose 6.8 percent to a record $5.50, making them the best performer on the benchmark NZX 50 Index today. The stock has gained 9.1 percent this year.

In the company's biggest business, the express package & business mail division, sales climbed 18 percent to $94.3 million and earnings before interest, tax and amortisation jumped 35 percent to $16.3 million. The Ebita margin widened to 17.3 percent from 15.1 percent, it said.

Its DX Mail business "continue to operate in a challenging market," although its suite of postal services were all performing ahead of the same year-earlier period, including Dataprint acquired in 2012, it said.

Freightways' information management division recorded a 14 percent increase in sales to $28.8 million and a 23 percent gain in Ebita to $5.9 million. The Ebita margin widened to 20.5 percent from 19.1 percent.

(BusinessDesk)