Freightways Continues Strong Growth For Half Year

Freightways Continues Strong Growth For Half Year

Freightways Express Limited (Freightways) has continued its strong performance posting consolidated earnings before interest, tax and amortisation (EBITA) of $16.8 million for the 6 months ended 31 December 2003, up 21% compared to $13.9 million for the corresponding period last year.

Operating revenue for the period of $101 million was up 7% on the same period last year. Topping $100 million in 6 months trading for the first time was a milestone for Freightways.

Managing Director, Dean Bracewell, reports strong performance across the entire Freightways group of companies, delivering $9 million consolidated profit after tax attributable to members, comfortably exceeding the dividend obligations to the approximately 2,800 New Zealand preference shareholders for the period of $1.9 million.

In accordance with the terms of issue, the preference share annual dividend rate was reset on 1 November 2002 at 10.16% for the next 12 months, inclusive of any imputation credits - 4.5% above the then prevailing One Year Government Stock yield, equating to an annual dividend of 6.8 cents per share (fully imputed).

Mr Bracewell says the revenue growth was achieved through strong performance in the Courier/Express Freight market, a developing position in the Business Mail market, and stepped growth in the Information Management sector.

“The results are particularly pleasing given that Freightways transitioned its ownership to ABN AMRO Holding NV during this period, with no disruption to the performance. This clearly demonstrates the resilience of all the group businesses and the professionalism of our people,” he says.

“With the continued focus on our core markets, and with robust marketing strategies we have managed to increase EBITA by a compound average growth rate of 18% over the last three financial years and we continue to grow revenues in excess of economic activity.”

The Courier/Express Freight and Business Mail operations contributed EBITA of $16.9 million for the half year, up 15% on the same period to 31 December 2001. The key brands of New Zealand Couriers, Post Haste Couriers, Castle Parcels, SUB60 and Security Express continued to experience sound trading conditions.

The smaller Information Management and Logistics businesses contributed EBITA of $0.9 million, up 53% on the same period a year ago. Improved utilisation of key facilities as a result of growth has contributed to this performance. Although relatively small and at an early stage in its lifecycle the investment made in the Information Management brands is now generating very good returns.

Mr Bracewell reports that Freightways has entered into an agreement to sell the logistics business unit, Stocklink. In conjunction with the sale, Freightways has entered into a long-term contract to provide Stocklink’s ongoing courier/express freight deliveries.

According to Mr Bracewell the outlook for Freightways remains positive, with EBITA margins having improved from 15% to 17% in the first six months and cash generated from operations (before interest and tax) increasing from $14.7 million to $18.4 million.

“The ongoing implementation of growth strategies, continued disciplined cost management, our culture of operational excellence and the leverage we derive from the scale of our operations will continue to drive Freightways’ superior performance.”

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