Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Freightways positive on mail as NZ Post shrinks

Freightways’ Bracewell remains positive on mail as NZ Post fires posties

By Suze Metherell

Feb. 25 (BusinessDesk) – Freightways managing director Dean Bracewell says he is upbeat about the prospects for his mail operations, seeing growth in niches such as overnight deliveries to businesses in a market where dominant player New Zealand Post is downsizing.

The company’s DX Mail unit, acquired in 1985, is the only nationwide business mail competitor for NZ Post, which plans to sack 2,000 workers over the next three years and shift to alternate-day mail deliveries in response to falling demand. DX Mail sits alongside Freightways’ Dataprint unit, a mailhouse that handles both physical and digital deliveries.

“We’re actually positive about our mail business,” Dean Bracewell, managing director of Freightways told BusinessDesk. “We see plenty of opportunity within the mail market, hence we’ve invested in street delivery networks, or posties on the street if you like, in many locations throughout New Zealand and are getting good growth in those areas.”

Freightways doesn’t split out results for DX Mail, which is a minor part of the express package and business mail division that lifted sales by 7 percent to $168 million in the first half. DX Mail grew revenue in the period, though its overall performance was down on a year earlier, as it shifts its focus from business box-to-box delivery to street delivery mail, Bracewell says.

“We see DX Mail being a growth opportunity for the company,” he said.

Targeting niches within mail delivery may give Freightways the opportunity to squeeze profit out of a market in which NZ Post is struggling to maintain a full postal delivery service. The state-owned company is trialing reduced deliveries in the next six months and is shrinking its network of 880 outlets, having relied on cost cutting to boost earnings in its first half.

NZ Post’s strategy includes making growth in parcels and logistics its top priority, as it retreats from a mail market it estimates has had a 30 percent decline in letter volumes since 2006. Freightways said in last year’s annual report that it expects to see customers “talk to DX Mail about its alternative services.”

Shares of Freightways gained 2 percent to $4.80 on the NZX, adding to a 2.8 percent gain yesterday, when the company reported a 3 percent increase in first-half profit. The stock is up 8.4 percent in the past 12 months, about half the gains of the NZX 50 Index.

Analysts say they want more evidence that there’s growth in mail.

“It is a good strategy. Whether it will pay off or not, time will tell,” said Dennis Lee, an analyst at Craigs Investment Partners. “When one pulls back, there is a gap in the market and if you can do it cheaper, if the environment is right, why not take the market?”

Freightways acquired DX Mail, then known as Legal Couriers in 1985, expanding it to a nationwide business-to-business mail system and a mail digitising service. It operates alongside Freightways’ stable of courier service brands.

“Door to door delivery in the city is very competitive but their major strength is from their national network and that puts them in a strong position," Craigs’ Lee says.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Wood Producers: Crisis In New Zealand Log Supply

New Zealand wood processing leaders held a hui with senior government officials and political leaders in Whangarei yesterday to assess the acute log supply shortage to local mills in Northland. More>>

Consents And Taxes: Trustpower 'Very Disappointed' With Judgement

Trustpower is "very disappointed" with a Supreme Court ruling dismissing its bid to claim tax deductions on $17.7 million of project costs in a case closely watched by large-scale infrastructure developers. More>>

ALSO:

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news