KEY POINTS:
The economic downturn is hitting Freightways but the listed courier company has increased profit and is watching for acquisitions.
Net profit for the six months ended December 31 was up 1 per cent to $16.9 million on the back of a 10 per cent rise in revenue to
$177.4 million. Revenue from existing customers was down but acquisitions,
new business and price rises boosted the total.
Freightways managing director Dean Bracewell said the company would continue to be affected by the downturn but was well positioned in the medium to long-term to reap the benefit of any improvement.
"We believe that our positioning strategies, our people strategies have been right in the last few years and whilst it's going to be tough in the next period ... our business is very strongly positioned to work its way through it," Bracewell said.
"Our profits have held up in this result as a result of what we've done in recent years, despite some of our customers being quieter."
The company would publish a trading update in April, including results for the third quarter.
"In looking forward it is difficult to determine the impact of the economic turmoil on Freightways operating environment," Bracewell said.
Express package and business mail accounted for 83 per cent of revenue, with the rest coming from information management.
The downturn had led to lower express package volumes from some customers, with volume fluctuating month to month creating difficulties in near-term capacity planning.
However, revenue from data and document storage had not been affected by the slowdown in the marketplace, Bracewell said.
"They continue to go very, very strongly. Demand continues to grow for the services we're providing in that space and it's underpinning our decision to move into that industry."
Freightways entered the information management area in New Zealand in 1999 and moved into Australia in 2006.
Document destruction performance, including the pick up, destruction and sale of paper to the recycling market, had slowed.
Freightways would continue to look at acquisitions and alliances.
"We're not and we never have said that we're solely all about acquisitions but we will continue to look," Bracewell said.
"We believe opportunities will come around in this market .. that may not have been there in the past but we'll be pretty particular about which ones we look to exercise and what price we look to pay."
The company had about $30 million debt headroom with its banks and in 2007 had renegotiated its facilities through to November 2010.
The interim dividend was a fully imputed 8c a share, compared with 9.5c the previous year.
The board had decided to be more cautious with the dividend given current uncertainty, Bracewell said.
Freightways' shares closed down 17c yesterday at $2.95.
Goldman Sachs JBWere analyst Marcus Curley said the result was at the lower end of expectation but not "dramatically so". "There wasn't anything within the result which was of any great concern, that you wouldn't associate with performance at this time in the economic cycle."
FREIGHTWAYS
Six months to Dec 31
Revenue
2008 - $177.4m
2007 - $161.9m
Net profit
2008 - $16.9m
2007 - $16.8m