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Mainfreight FY profit climbs 36% on Bosman settlement

Mainfreight FY profit climbs 36% on Bosman settlement, focused on global growth

By Paul McBeth

May 28 (BusinessDesk) - Mainfreight, the transport and logistics group, boosted annual profit 36 percent, helped by the settlement with the former owners of Wim Bosman, and is focused on growing its global footprint on the way to becoming "a substantially bigger and better business."

Net profit rose to $86.6 million, or 90.27 cents per share, in the 12 months ended March 31, from $65.9 million, or 66.45 cents, a year earlier, the Auckland-based company said in a statement. Stripping out the $12.1 million gain from its Wim Bosman settlement and restructuring costs in Europe, earnings rose 14 percent to $77.5 million on a 2.1 percent gain in sales to $1.92 billion.

"The aches and pains of establishing our footprint in Europe through our 2011 acquisition are behind us, and the potential for growth can be clearly seen in Australia, Asia and the Americas," the company said. "We are focused on developing all our offshore operations into significant profit and revenue contributors for our group."

Mainfreight recognised the $12.7 million Bosman settlement in the first half, following a dispute after the European business lost several key trading accounts.

The company dropped parcel-freight from its Australian transport unit in the year, closed an unprofitable Belgian operation and is putting more resource into building long-term customer relationships in the US domestic market.

"We are confident of bettering our financial performance again," the company said. "More importantly, we will maintain the momentum we have, growing Mainfreight into a substantially bigger and better business."

The board declared a final dividend of 19 cents per share, payable on July 18, taking the annual return to 32 cents.

The shares fell 0.9 percent to $12.92 yesterday, and have gained 7.9 percent this year. The stock is rated an average 'hold' based on five analyst recommendations compiled by Reuters, with a median target price of $12.20.

Mainfreight's New Zealand unit boosted sales 6.6 percent to $505.2 million and earnings before interest, tax, depreciation and amortisation rose 12 percent to $67.4 million. The Australian business increased revenue 5.8 percent to A$458.5 million, and lifted Ebitda 16 percent to A$35.2 million, and its contribution to group earnings is expected to eclipse New Zealand's "in the not too distant future."

The company's American unit increased sales 1.7 percent to US$363.6 million and Ebitda 11 percent to US$18.9 million, and is expected to grow at a faster pace than than the rest of the company in the near term as market opportunities are exploited.

The European business increased sales 2.4 percent to 250.7 million euros, though Ebitda declined 5.7 percent to 8.92 million euros.

"We are cautiously optimistic that the worst of our European business's disappointing performance is now behind us, and is well-positioned to provide more growth and profitability into the future," the company said.

Mainfreight's Asian unit boosted sales 26 percent to US$37.7 million, and Ebitda climbed 36 percent to US$3.52 million, largely through trade to and from the US.

The company increased operating cashflow to $120.4 million from $83.2 million, holding cash and equivalents of $54.5 million as at March 31. Mainfreight held bank debt of $258.4 million at the end of the financial year, down from $277.3 million a year earlier.


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