Mainfreight FY profit rises 16%, tops $100m for the first time, on strong ANZ performance

Mainfreight, the transport and logistics group, posted a 16 percent gain in full-year profit, which exceeded $100 million for the first time, led by earnings growth in New Zealand and Australia.

Profit rose to $101.5 million in the 12 months ended March 31, from $87.6 million a year earlier, the Auckland-based company said in a statement. Sales climbed to $2.3 billion from $2.28 billion.

Mainfreight shares have gained 28 percent in the past 12 months, more than four times the gains of the NZX 50 Index and last traded at $22.28. In that time, Mainfreight has continued to improve the performance of its European operations, which saw pretax earnings jump by more than a fifth in the full year. Shareholders will be rewarded with a 10.8 percent increase in dividends to 41 cents a share, with a fully-imputed final payment of 24 cents declared, payable on July 21 with a July 14 record date.

The company is also rewarding its team, with the biggest-ever bonus payment of $19.27 million, up about 19 percent from a year earlier.

Stronger trading in New Zealand, Australia and Europe made up for a disappointing performance from the company's Americas and Asia divisions. Sales in the Americas fell 4.7 percent to $436 million, mainly reflecting its CaroTrans unit, while earnings before interest, tax, depreciation and amortisation fell 0.6 percent to $18.6 million, again mainly reflecting CaroTrans, the company said. Its Mainfreight branded business in the US - Air & Ocean, domestic transportation and logistics - recorded a more modest 1.2 percent decline in revenue.

Managing director Don Braid said senior management changes "and a renewed focus on our core capabilities will address performance issues. CaroTrans remains an important part of our US presence, providing a complimentary business to the Mainfreight operations."

Mainfreight remains "committed and excited" about the Americas market and its long-term prospects, he said.

In Asia, sales jumped 35 percent to $63 million but ebitda fell 1.6 percent to $6.3 million. The company said stronger airfreight demand into the US, evident in the first half, had ebbed in the second half and the company was unable to counter the decline. Mainfreight also opted to withdraw from a plan to establish a warehouse operation in Hong Kong, it said.

Mainfreight's New Zealand business recorded an 8.2 percent gain in sales to $609 million and ebitda jumped 17 percent to $91 million. The company noted "very much increased" volumes in transport and logistics as the volume of customers rose and record migration and tourist inflows stoked business confidence. Mainfreight said it managed to achieve an improved performance even in the face of disrupted supply routes as a result of the Kaikoura earthquake.

Australian sales rose 6.3 percent to A$535 million and ebitda rose 24 percent to A$42 million, which the company said reflected sales growth and better control of costs. The performance has given the company confidence to invest in additional land and buildings for transport and logistics in Melbourne, Adelaide, Sydney and Brisbane, while branches in the smaller centres of Toowoomba and Bendigo were planned.

European sales rose 10 percent to 292 million euros, while ebitda jumped 21 percent to $17.2 million euros and the company said it expects that growth to continue in the current year. Its logistics operations "have performed particularly well," it said.

"We have much to do to improve our sales revenues and profitability in the larger markets of Asia, America and Europe, where we continue to see significant growth prospects," Braid said.

It has earmarked capital spending for the current year of about $75 million for property development and $37 million for non-property capex including software development.

Braid said the company was aware of the changing dynamics of global logistics, including the rise of online trading operators who had built their own warehousing and distribution. Those threats would continue to evolve but Mainfreight was confident its " flexibility, supply chain management capability and innovation make us confident of our ongoing growth and position in the logistics sector."

(BusinessDesk)