Freightways profits up 11pc - slow future growth tipped

Freightways Limited's Managing Director Dean Bracewell at the company's Penrose headquarters. File photo / NZ Herald
Freightways Limited's Managing Director Dean Bracewell at the company's Penrose headquarters. File photo / NZ Herald

Freightways, the courier and data management company, posted an 11 per cent gain in first-half profit to a record, meeting estimates, and said the outlook is for a slow pace of growth.

Profit rose to $21 million in the six months ended December 31, from $18.97 million a year earlier, the Auckland-based company said in a statement. Sales rose 8 per cent to $206.7 million.

See Freightways' latest investor presentation here.

The biggest contribution to revenue growth in the latest period came from acquisitions, which lifted sales by 2.9 per cent including the full-service mailhouse acquired in July last year, while pricing and volume increases both contributed 2.3 per cent.

The earnings margin on its express package and business mail unit, which accounts for about 75 per cent of the business, held steady at 17 per cent, while the earnings before interest, tax and amortisation margin for information management rose 1 percentage point to 18 per cent.

Shares of Freightways were unchanged at $4.50 and have climbed by 25 per cent in the past 12 months. The shares are rated 'hold' based on the consensus of six analyst recommendations compiled by Reuters, with a median price target of $4.39.

Freightways will pay an interim dividend of 9 cents a share, up from 8.5 cents a year earlier, on April 2, with a record date of March 15.

Operating revenue from express package and business mail rose 6 per cent to $158 million and EBITA gained 2 per cent to $26 million.

"The positive momentum that we have been achieving in our express package businesses is expected to continue at similar levels for the foreseeable future," the company said. Letter volumes within business mail will continue to decline though that will be offset by market share gains, it said.

Information management sales climbed 15 per cent to $50 million and EBITA jumped 23 per cent to $9 million.

Freightways said growth in that unit will continue apart from in its recycled paper business, where prices were lower than a year earlier.

The results include a one-time pretax gain of $1 million for the reversal of an earnout on the company's acquisition in November 2010 of Universal Mail, a New Zealand-based international postal service provider because it didn't meet agreed targets.

Managing director Dean Bracewell said Universal Mail had been affected by the Christchurch earthquakes and disruptions to large tourist outlets in the city, though the business is "going well."

"We remain optimistic about the future," he said on a conference call.

- BusinessDesk

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