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Jamie Gray 's Opinion

Jamie Gray is a business reporter for the New Zealand Herald and NZME. news service.

Mainfreight profit forecast to rise

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Strong performances in New Zealand and Australia are expected to be reflected in the firm's result. Photo /  Sarah Ivey
Strong performances in New Zealand and Australia are expected to be reflected in the firm's result. Photo / Sarah Ivey

Logistics company Mainfreight is expected to post a hefty lift in its net profit when it reports its annual result this week - boosted by the acquisition of European logistics company Wim Bosman last year and by strong divisional performances from its New Zealand and Australian operations.

Mainfreight bought Wim Bosman - one of the largest privately owned, integrated transport and logistics providers in the Netherlands and Belgium - in April last year for $205 million, funded entirely by debt.

Rob Mercer, head of research at Forsyth Barr, said he expected Mainfreight to report a 50 per cent increase in earnings before interest, tax, depreciation and amortisation (Ebitda) for the year to March to $138 million, with Wim Bosman accounting for about $31 million.

At the Ebitda level, Mercer expected the Australian division to report a 40 per cent increase, and the New Zealand division a 10 per cent increase. Improvements are also expected from the company's US operations.

Mercer expected a 40 per cent increase in the company's profit before abnormals to $66 million.

For the nine months to December 31, Mainfreight reported a net profit before abnormals of $46.75 million, up 35 per cent on the previous corresponding period, but its quarterly result was below expectations.

The fourth quarter is expected to be an improvement over the third.

Mainfreight will face a higher interest bill arising from the Wim Bosman acquisition but, because it was funded in euros, interest charges are expected to be relatively low, at under 4 per cent.

Early this year, investors punished Mainfreight after it revealed third-quarter trading, including in its new European business, had fallen below expectations. With a share price that more than tripled between early 2009 and August last year, when it hit a high of $10.72, the Auckland-based company became one of the market's better performers.

But after the third quarter release, the stock dropped sharply to around $9.40, closing on Friday at $9.44.

The company's result is due on Wednesday, the same day as fishing company Sanford is to report its first-half earnings report.

Statistics NZ is also set to release building consents data for April on Wednesday.

- APNZ

Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and NZME. news service.

Jamie Gray is a business reporter for the New Zealand Herald and NZME. news service. He has been a business journalist for 30 years, working for NZPA and, mainly, the Reuters news agency. He enjoys fast breaking business news stories but also likes to get to the bottom of complex issues. He is driven by telling readers what is going on but also has a soft spot for the occasional quirky business story which gets people talking. He has a special interest in Fonterra.

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