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Mainfreight first-half profit rises 27pc, meeting guidance, Europe picks up

By Jonathan Underhill

Mainfreight shares last traded at $18.62 and have gained 21 per cent this year. Photo / File
Mainfreight shares last traded at $18.62 and have gained 21 per cent this year. Photo / File

Mainfreight, the transport and logistics group, posted a 27 per cent gain in first-half profit as margins improved in New Zealand, Australia, Asia and Europe, and expects a continuation of stronger trading in the second half.

Profit was $41.8 million, or 41.7 cents per share, in the six months ended September 30, from $32.9 million, or 32.87 cents a year earlier, the Auckland-based company said in a statement. Sales climbed to $1.14 billion from $1.11 billion.

The first-half results show a turnaround in its European business is continuing, with sales rising 4.4 per cent to 136 million euros and earnings before interest, tax, depreciation and amortisation up about 30 per cent to 7.65 million euros.

With strong gains in New Zealand, Australia and Asia, the Americas remained the weakest region, which it attributed to its exposure to international shipping, where freight rates have been falling globally. Still, its international trade volumes "are on the increase," it said today.

"This strong first-half result reflects improving margins and satisfactory cost management across most business units," managing director Don Braid said in the statement.

"Pre-Christmas volumes are strong and it is our expectation that current momentum will be continued, giving us confidence that we will deliver an improved full-year 2017 result."

Mainfreight will pay a first-half dividend of 17 cents a share on December 16, with a record date of December 9, up 3 cents on its first-half payment last year. Its shares last traded at $18.62 and have gained 21 per cent this year, outpacing the S&P/NZX 50 Index's 9 per cent gain. The stock is rated a 'buy' based on a rolling Reuters poll of six analysts.

First-half operating cash flows increased to $52 million from $45.9 million a year earlier.

In New Zealand, its biggest market by earnings, sales rose 6.1 per cent to $288 million while ebitda jumped 28 per cent to $37 million. It is expecting record pre-Christmas volumes from its domestic transport business, "necessitating additional road and coastal shipping resource to offset a lack of rail capacity".

Pre-Christmas volumes are strong and it is our expectation that current momentum will be continued, giving us confidence that we will deliver an improved full-year 2017 result.

In Australia, "sales revenues have not grown as aggressively as we would have liked, (but) margin improvement and better cost control have seen pleasing financial performance," it said. Sales across the Tasman climbed 3.6 per cent to A$258 million while ebitda rose 22 percent to A$16.1 million.

Asian sales soared 45 per cent to US$31 million, excluding inter-company revenue, and ebitda rose about 21 per cent to US$4.7 million.

Sales in the Americas fell 0.9 per cent to $226 million, reflecting the impact of lower international shipping rates on its Mainfreight Air & Ocean and the NVOCC operations of CaroTrans, it said. Ebitda climbed 4.5 per cent to $9.8 million.

"The management restructure for CaroTrans has placed a strong emphasis on revenue growth and improving branch management performance," Mainfreight said. "A lift in customer booking statistics through October and into November is encouraging."

- BusinessDesk

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