Freightways posts 20 per cent profit lift

Courier company Freightways today reported a 20 per cent rise in first-half profit, but warned the business environment would become tougher as the economy slows.

Freightways posted a net after-tax profit of $13.5 million for the six months to December 31, compared with $11.2m in the same period a year earlier.

Shares in Freightways, which declared an interim dividend of 8.5c per share, opened 2c higher at $3.30 on the news.

Freightways has around 40 per cent of the local courier market, with brands including New Zealand Couriers, Post Haste Couriers, Castle Parcels, SUB60, Security Express, and the newly-acquired Kiwi Express.

Today's result was based on operating revenue of $130m, 11 per cent higher than the same year ago period.

Earnings before interest, tax, and amortisation (ebita), rose 10 per cent to $29m.

The company, which expanded its flagship New Zealand Couriers business into business mail and information management ahead of an NZX listing in September 2003, said most of its turnover was still generated from its express package business.

Modest growth from existing customers, good market share gains and disciplined pricing strategies all contributed to revenue growth, Freightways said.

Price increases offset the impact of high fuel costs during the period and the express business was also boosted by sales from Kiwi Express, which Freightways purchased in October last year.

Freightway's business mail brand, DX Mail, delivered strong revenue growth in comparison to the previous half year. The development of DX Mail's domestic street mail delivery network was also progressing to plan.

Its information management businesses, Archive Security, Document Destruction Services, and Data Security Services also delivered a greatly improved result.

Looking ahead, Freightways said it was eyeing growth opportunities in all three of its core markets, as a way of offsetting lower growth from its existing customers in an increasingly "challenging" business environment.

- NZPA