Mainfreight first-half profit surges 52% on better growth in U.S., Asia
Nov. 18 (BusinessDesk) – Mainfreight Ltd., the trucking company whose shares have jumped by a third this year, reported a surge in first-half earnings as it managed to squeeze more profit from a moribund U.S. economy and lifted returns in Asia.
Profit excluding one-time items rose 52% to $16.5 million in the six months ended Sept. 30, from $10.9 million a year earlier, the Auckland-based company said in a statement. Sales rose 20% to $645 million, or a gain of about 25% excluding foreign exchange movements. Offshore sales now account for 70% of Mainfreight’s revenue, generating 50% of earnings before interest, tax, depreciation and amortization.
In the U.S., sales climbed 28% and EBITDA surged 127% to $6.73million, reflecting better third-quarter trading for both domestic and international freight. The U.S. results were encouraging though still below expectations, managing director Don Braid said.
“Irrespective of media commentary, general trading conditions for our operations throughout the U.S. continues to improve,” Braid said. Trading in October and November continued to show the improvement seen in the first half and margin management “remains a key focus for our teams throughout the U.S.”
Mainfreight shares fell 2% to $7.25, paring their advance this year to about 33%. The shares are rated ‘outperform’ based on the consensus of six analyst recommendations compiled by Reuters.
The company will pay a first-half dividend of 9 cents a share on Dec. 17, up 0.5 cent from a year earlier.
Business performance improved in most divisions, Braid said.
New Zealand domestic revenues increased 6.6% to $137 million, while its NZ international division’s sales rose 19% to $57 million. International shipping and airfreight rates have increased, reflecting capacity shortages across international trade lanes he said.
Australian domestic sales revenue lifted 26% to $104 million, and Australian international sales rose 26% to $116 million.
Asia international sales revenue improved 59% to $19 million as the company celebrated the 10th anniversary of its Shanghai branch.
Capital expenditure in the six months was $5.6 million, of which $1.35 million was property related.
“Property development expenditure is expected to increase during the next six months as building projects gather momentum,” Braid said.