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Mainfreight first-half profit rises 27%

Wednesday 09 November 2016 09:25 AM

Mainfreight first-half profit rises 27%, meeting guidance, as margins widen, Europe picks up

By Jonathan Underhill

Nov. 9 (BusinessDesk) - Mainfreight, the transport and logistics group, posted a 27 percent 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 Sept. 30, from $32.9 million, or 32.87 cents 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 percent to 136 million euros and earnings before interest, tax, depreciation and amortisation up about 30 percent to 7.65 million euros. 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 17 cents a share on Dec. 16, with a record date of Dec. 9, up 3 cents on its first-half payment last year. Its shares last traded at $18.62 and have gained 21 percent this year, outpacing the S&P/NZX 50 Index's 9 percent gain. The stock is rated a 'buy' based on a rolling Reuters poll of six analysts.

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

In New Zealand, its biggest market by earnings, sales rose 6.1 percent to $288 million while ebitda jumped 28 percent 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 percent to A$258 million while ebitda rose 22 percent to A$16.1 million.

Asian sales soared 45 percent to US$31 million, excluding inter-company revenue, and ebitda rose about 21 percent to US$4.7 million.

Sales in the Americas fell 0.9 percent 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 percent 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."



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