Fliway Group first-half profit dropped 39 per cent as the impact of a major customer's exit and higher freight costs caused by last November's Kaikoura earthquake weighed on the transport and logistics group.
Net profit fell to $2.2 million, or 4.8 cents per share, in the six months ended December 31, from $3.6m, or 7.9 cents a year earlier, the Auckland-based company said in a statement. Revenue slipped 1.4 per cent to $43.2m as a new customer won in December and upgrades to existing clients bolstered sales in the final month of the period. Profit fell short of Forsyth Barr analyst Andy Bowley's forecast of $3.1m, although revenue exceeded his expectation for sales of $40.5m.
Fliway had previously signalled the lost customer would hit underlying earnings by about 10 per cent and embarked on a cost-cutting exercise last year to offset the impact. While personnel costs fell 4 per cent to $14.5m, disbursement costs were up 3.4 per cent to $12.1m and freight costs jumped 33 per cent to $2.4m.
"Issues additionally impacting the business have been capacity constraints in the transport business unit as a result of internal linehaul equipment availability and the Kaikoura earthquake, which transferred significant rail freight volumes on to road, thereby consuming capacity overflow options over a peak trading period," Fliway said today. "Customer volumes, particularly in the second quarter, exceeded the network capacity in transport."
Fliway's board declared an interim dividend of 2 cents per share, payable on April 20 with a March 31 record date, down from 3.3 cents a year earlier.
"The balance sheet and declared dividend remain conservative to ensure capacity exists in whatever form required to convert the strong sales pipeline into improved earnings," it said.
The transport group expects its second-half performance will be an improvement on the prior year, with sales growth a priority as it "looks to sell to capacity in its network and increase relationships with existing customer and business partners."
Revenue from Fliway's domestic business edged down to $29m in the period from a year earlier, while earnings before interest, tax, depreciation and amortisation dropped 27 per cent to $4.3m and the international segment's sales slipped 2.7 per cent to $14.2m for a 0.8 per cent dip in ebitda to $2m.
Its joint venture with UPS boosted the volume of import packages by 13 per cent in the half, although earnings from the unit fell to $458,000 from $613,000, which Fliway said was part of a strategy to "improve the cost of delivering a package in New Zealand in order to drive continued import package growth."
The shares last traded at $1.17 and have gained 22 per cent over the past 12 months.