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Freightways delivers 'strong result' and $22.5m payout

By Fiona Rotherham

Freightways CEO Dean Bracewell. Photo / Supplied
Freightways CEO Dean Bracewell. Photo / Supplied

Courier company Freightways delivered a steady if unspectacular full-year result with both increased revenue and profits driven by increased migration and higher consumer demand, and is predicting incremental growth in the year ahead.

The Auckland-based company reported a 5.4 per cent revenue increase to $505.4 million for the year ended June 30, while underlying profit, before one-off items, rose 8 per cent to $54.4m.

There was a non-recurring charge of $6.3m relating to the further write-down of the carrying value of its four Convair aircraft, which fully retire by the end of this month, and related spare parts. Half the $15m dollar book value of the fleet was written down immediately when the decision was made to switch to leasing and operating three Boeing 737-400s which carry higher volumes.

The Convair aircraft, which haven't yet attracted any buyers, are now valued at a total $1m - the value of their spare parts.

Freightways chief executive Dean Bracewell said it was a "good, strong result for Freightways once again" with all divisions showing growth.

Directors declared a fully-imputed final dividend of 14.5c per share, a 16 per cent increase on the previous corresponding period of 12.5c per share. The dividend is a record payout to shareholders of about $22.5m, and has a record date of September 16 and will be paid out on October 3.

Freightways is seen as a bellwether of the economy and has a good track record on forecasting, although the company does not provide a forecast profit range as done by most other listed firms.

Bracewell said being an economic forecaster was a mantle he'd "like to side-step" but he was expecting to increase Freightway's year-on-year earnings in 2017 with positive incremental growth, rather than "racing ahead".

Growth this year followed increases from some customers but quieter trading in the larger dairy industry areas of Waikato, Southland and Taranaki, he said.

Freightways doesn't report the split in New Zealand and Australian earnings, though Bracewell said revenue was now more heavily weighted to Australia.

The express package and business mail division, which operates under a number of brands such as New Zealand Couriers and Post Haste, lifted revenue by 2.9 per cent to $370m but earnings before interest, tax, depreciation and amortisation was down 2.6 per cent to $66.5m.

The company is spending $11m on a new purpose-built facility - its first fully automated one - in Christchurch to consolidate operations from three separate facilities into one that will have airside access to the Boeing fleet.

The company plans to be a fast-follower rather than market leader on both self-driving and electric vehicles. Bracewell said both are inevitable for the industry, as is disruption at some stage from an "Uber-like" challenger.

Self-drive vehicles could be used for fixed courier runs and line-haul routes, he said, and Freightways was watching closely what international companies such as FedEx and TNT were doing in this area.

Freightways shares dropped 8c yesterday to $6.66.


• year ended June 30

• $505.4m revenue, up 5.4 per cent

• $54.4m underlying profit, up 8 per cent

• 14.5c final dividend, up 16 per cent

- BusinessDesk

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