Mainfreight beats profit guidance, expects earnings to rise

Mainfreight [NZX: MFT], the transport and logistics group, topped its annual profit guidance and says earnings will rise further in the coming year.

The Auckland-based company says profit, excluding abnormal items, rose 7.7 percent to $83.5 million in the year ended March 31, ahead of its forecast range of $80 million to $83 million.

The company had a $1.1 million one-time cost in the latest year and a $12.1 million gain the year earlier. Revenue increased 6.8 percent to $2.05 billion, at the top end of its $2 billion to $2.05 billion forecast range.

Mainfreight is expanding its operations through Asia, North America and Europe in an attempt to become a significant global logistics business. The company says its latest earnings had been hurt by a slowdown in Australia and a disappointing performance from its US operations. Still, it says earnings will improve in the coming year even as current trading in Australia is tougher than expected.

"It is our expectation the benefit of the worldwide network will offset any negativity that we see in Australia as it recovers economically," the company says. It didn't provide further details.

The company will pay a 20 cents per share final dividend on July 17, taking its annual payments to 34 cents, up from 32 cents the year earlier.

Mainfreight says annual group earnings before interest, tax, depreciation and amortisation rose 8.7 percent to $162.2 million, ahead of its forecast range of $156 million to $160 million. Excluding the impact of foreign exchange effects, earnings rose 10.4 percent.

In New Zealand, earnings rose 9.2 percent to $73.6 million as revenue increased 7.4 percent to $542.7 million.

Mainfreight says the local unit is benefiting from its expanding global network of multinational customers. It has completed new facilities in Christchurch, Hamilton and Auckland and is eyeing three more new builds over the short to medium term.

In Australia, earnings rose 5.8 percent to A$37.2 million as revenue increased 7 percent to A$490.7 million.

"The last six months saw reduced growth over the prior period, and this has continued into the new financial year," the company says. "We expect a tougher than usual time across our Australian divisions in the short term."

In its Americas business, earnings advanced 1.4 percent to US$19.1 million as sales increased 16 percent to US$422.2 million. The company says a poorer second half from Mainfreight USA added to a disappointing performance from CaroTrans.

In Europe, earnings rose 34 percent to 11.9 million euros as revenue gained 3.6 percent to 259.7 million euros.

"Whilst the European economy remains turbulent, our own improved performance is providing confidence for the future," Mainfreight says. "Trading into the new financial year continues the trends seen in this reporting period."

Shares in Mainfreight last traded at $15.90, and the stock is rated an average 'hold', according to five analyst recommendations compiled by Reuters.

(BusinessDesk)

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