Mainfreight adds 3500 people to its team since pandemic hit. Photo / Supply
Mainfreight adds 3500 people to its team since pandemic hit. Photo / Supply
Mainfreight managing director Don Braid says it'd be expecting "too much" of the global logistics business for it to repeat its stellar FY22 profit and revenue numbers in the next couple of years.
Then again, he says the Auckland-headquartered company is "only just getting started" in the Americas, and thatthe vast Asia market holds great promise for a business that's still small there.
The business did not expect the quantum of profit improvement of FY22 to reoccur in the short term. Rather it anticipated reverting to "our normal levels of revenue and profit growth".
Mainfreight's share price lifted 3.3 per cent to $77.52 on the back of it posting an 86.5 per cent increase in FY22 profit before tax to $490 million.
Revenue at $5.2 billion was up 47 per cent or $1.6b on the previous year.
Braid noted the company had paid $143m to its shareholders, tax of $134m and "we are sharing $94m with our people".
"It feels good."
While the market was keen for earnings guidance, as expected, it wasn't provided.
However, Braid told the Herald that expecting Mainfreight "to produce another 90 per cent increase in before-tax profit and 40 per cent in revenue for the next couple of years is too much to ask of the business".
"But we would expect to get back to our normal levels of growth and profitability that we had pre (supply) congestion."
Mainfreight managing director Don Braid. Photo / Supplied
The Americas operation was the biggest profit and revenue contributor to the result when converted to NZ dollars. Revenue was up 89 per cent or US$512.5m at US$1.09b. Before-tax profit was up 289 per cent at US$100.8m.
"We're only just getting started there. The potential has got us excited. We're strong in the US and beginning to grow in Canada and Mexico," Braid said.
Asia recorded its best-ever performance with profit before tax of US$29m and revenue up 121.5 per cent at US$231m.
"We benefited mostly from trans-Pacific eastbound trade into America, our biggest shipping lane in the world. We've been able to find some momentum in Southeast Asia. Malaysia, Thailand, Vietnam and Korea have performed really well for us ... that we are still quite small for the size of those countries bodes well for the future."
Braid expected global supply chain congestion to continue in the immediate future.
"There are still problems with Shanghai (ports) being closed, there's still congestion at most of the major ports, there's a shortage of equipment and Russia/Ukraine brings another piece into the jigsaw."
Braid said "much had been said" about the artificial impact on Mainfreight revenues of the inflated air and sea freights associated with pandemic-driven freight demand and supply chain troubles.
"But it's not just our international air and ocean business that has grown - the whole business has grown in every region. Our success offshore has been criticised in the past and a result like this shows we have momentum in every region (five) we are in.
"It's a portion of the result. There's no doubt higher freight rates have given us a revenue increase but we have grown volumes as well."
Braid said the number of TEUs (twenty-foot equivalent containers) moved increased 22 per cent, airfreight kilograms by 20 per cent and domestic tonnage around the world by 13 per cent. The company's warehouse space per sq m had increased 15 per cent.
"It's a mixture of really good performance, increased volumes and certainly the efforts our people have gone to move more freight."
The results took account of the closure of the Russian operation.
Braid thought it would be "a long time before we go back".
Mainfreight, now in 10 countries in Europe, had added 3500 people to its team in the past two years, to now total 10,393. Net profit after tax from the offshore businesses now exceeded 72 per cent of the group total.
Braid has led Mainfreight since 1994. Asked how long he planned to stay on in the job, he said "as long as they want me".
"I'm still enjoying it. I love it. As long as the performance is there, and shareholders and directors want me here, I'm here."
Jarden senior analyst Andrew Steele said the FY22 result was "very solid".
Profit before tax was 3.6 per cent above Jarden's estimate, and revenue 1.3 per cent higher than it forecast. Steele noted net debt at $1.1m was down $114.6m from the previous year.
Steele said Mainfreight's comments on current trading were broadly positive, as was the operating outlook. Disrupted supply chains and shipping were expected to provide a tailwind for air and ocean earnings, he said.
Mainfreight said trading in the seven weeks since the financial year-end had continued the trend of improvement.
