Mainfreight first-half profit rises 27%

Transport and logistics group Mainfreight posted a 27% gain in first-half profit as margins improved in New Zealand, Australia, Asia and Europe, and expects a continuation of stronger trading in the second half.

Profit was $41.8 million, or 41.7 cents per share, in the six months ended September 30, from $32.9 million, or 32.87c a year earlier, the Auckland-based company said in a statement. Sales climbed to $1.14 billion from $1.11 billion.

The first-half results show a turnaround in its European business is continuing, with sales rising 4.4% to €136 million and earnings before interest, tax, depreciation and amortisation up about 30% to €7.65 million. With strong gains in New Zealand, Australia and Asia, the Americas remained the weakest region, which it attributed to its exposure to international shipping, where freight rates have been falling globally. Still, its international trade volumes "are on the increase," it said today.

"This strong first-half result reflects improving margins and satisfactory cost management across most business units," managing director Don Braid said in the statement. "Pre-Christmas volumes are strong and it is our expectation that current momentum will be continued, giving us confidence that we will deliver an improved full-year 2017 result."

Mainfreight will pay a first-half dividend of 17c a share on December 16, with a record date of December 9, up 3c on its first-half payment last year. Its shares last traded at $18.62 and have gained 21% this year, outpacing the S&P/NZX 50 Index's 9% gain. The stock is rated a 'buy' based on a rolling Reuters poll of six analysts.

First-half operating cashflows increased to $52 million from $45.9 million a year earlier.

In New Zealand, its biggest market by earnings, sales rose 6.1% to $288 million while ebitda jumped 28% to $37 million. It is expecting record pre-Christmas volumes from its domestic transport business, "necessitating additional road and coastal shipping resource to offset a lack of rail capacity."

In Australia, "sales revenues have not grown as aggressively as we would have liked (but) margin improvement and better cost control have seen pleasing financial performance," it said. Sales across the Tasman climbed 3.6% to $A258 million while ebitda rose 22% to $A16.1 million.

Asian sales soared 45% to $US31 million, excluding inter-company revenue, and ebitda rose about 21% to US$4.7 million.

Sales in the Americas fell 0.9% to $226 million, reflecting the impact of lower international shipping rates on its Mainfreight Air & Ocean and the NVOCC operations of CaroTrans, it said. Ebitda climbed 4.5% to $9.8 million.

"The management restructure for CaroTrans has placed a strong emphasis on revenue growth and improving branch management performance," Mainfreight said. "A lift in customer booking statistics through October and into November is encouraging."

(BusinessDesk)