Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

Mainfreight shares rally as profits leap

Mainfreight said its net profit for the year came to $65.7 million, up 39.2 per cent. Photo / Sarah Ivey
Mainfreight said its net profit for the year came to $65.7 million, up 39.2 per cent. Photo / Sarah Ivey

Shares in logistics company Mainfreight rallied today after the company's annual result came in at the top end of market expectations.

By midday the stock was at $9.80, up 34c or 3.6 per cent from Tuesday's close.

Forsyth Barr head of research Rob Mercer said the result helped restore confidence to the stock after the market had taken fright early this year over a disappointing third quarter trading report.

In today's result, Mainfreight said its net profit for the March year came to $65.7 million, up 39.2 per cent on the previous year's, but said its latest acquisition, Europe's Wim Bosman, had experienced a challenging second half.

Earnings before interest, tax, depreciation and amortisation (EBITDA) showed a similar trend, up 50.9 per cent to $138.2m.

The average of consensus forecasts, published by Bloomberg, were for EBITDA of $135.3m and a net profit of $63.3m, with the uppermost forecasts being at $139m and $66m, respectively.

Mainfreight said sales revenues, at $1.81 billion, were at record levels - up 35.2 per cent on the prior year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) showed a similar trend, up 50.9 per cent to $138.2m.

The result was in line with market expectations.

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 $205m, funded entirely by debt.

Wim Bosman had a challenging second half, where lost warehousing volume and poor Belgium freight performance affected profits.

The new acquisition's financial performance was below the level that would have triggered an additional 10m earn-out payment, and this sum - equivalent to $17.06m - had been written back to the profit and loss account as an abnormal item.

"Nevertheless, the significance of establishing ourselves in Europe should not be underestimated, where our profile is increasing with multi-national customers who continue to search for more efficient supply chains," the company said.

Excluding Wim Bosman, the performance of the remaining business units had also produced record results.

"Certainly the momentum created in the previous 12 months has assisted our growth and while our second half results were somewhat behind our aspirations, we are satisfied with the final result," the company said.

The business performance improved in the company's Australian and New Zealand operations.

The North American and Asian operations had mixed results with Mainfreight USA continuing its improvement from the year prior.

CaroTrans encountered lower than expected US export volume in a difficult shipping environment.

Asia performed below expectations as falling freight rates and rising cost structures affected profitability.

Mainfreight declared a final dividend of 14c a share, taking the full dividend for the year to 26c - up 30 per cent on the previous year's.

For the current financial year, Mainfreight said trading through April and May had continued the past year's trends for Australia, New Zealand and the USA. In Asia, trading has been inconsistent and disappointing, the company said.

"In Europe, April trading in our Transport divisions was improved on the year prior, however with five fewer working days due to public holidays, May trading has disappointed," it said.

- APNZ

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