Mainfreight half year profit rises 30 per cent on improved global performance

Mainfreight posted a 30 per cent rise in half-year profit. Photo/File.

Strong New Zealand regional freight growth and a solid performance across its other four global operating regions contributed to a 30.7 per cent lift in first half year profit for freight and logistics company Mainfreight.

The NZX-listed Auckland-based company posted a net profit nudging $60 million before abnormals for the six months to September 30.

Revenue was $1.4 billion, an increase of $205.4m or 17 per cent on the corresponding previous period.

Earnings before interest, tax, depreciation and amortisation at $108.3m was $19.5m or 22 per cent higher than first half year 2018.

Adjusted for foreign exchange impact, revenue was up 13.2 per cent and EBITDA up 19.3 per cent.

Sales generated overseas totalled $1.09b, 76 per cent of Mainfreight's total revenue, said group managing director Don Braid.

Offshore divisions were now contributing more than 58 per cent of EBITDA at $63m, he said.

Directors approved an interim dividend of 22c per share, up 3c on last year's interim payout.

Continuing improved financial performance through October and November suggested the dividend could increase again the second half providing the momentum was maintained, Braid said.

He said the half year result was "satisfactory compared with a somewhat muted result" in the previous period.

"It is our expectation that financial performance will continue to be better for the full year, delivering another improved full-year profit," he said.

A standout regional performer was New Zealand which posted an 18.2 per cent or nearly $7m lift in EBITDA to $45.4m. Revenue at $343m was up $26m or 8.3 per cent on the previous corresponding period, due to record freight volumes nationwide and reliable rail services, particularly in the South Island where there had been long periods without rail last year, the company said.

Pre-Christmas freight volumes across all New Zealand divisions were at record levels.

In Australia, revenue was up AU$48.7m or 16.7 per cent at AU$342m. EBITDA lifted 8 per cent to AU$22.5m.

Braid said Mainfreight was finding momentum in America and Europe.

US revenue was up 16.8 per cent or US$34m at US$237m while EBITDA lifted 30 per cent
to US$11m. The improvement was largely spurred by new customer gains in domestic transport operations.

Europe divisions recorded sales growth and operational improvements with revenue up 12 per cent at 183m euro. EBITDA lifted nearly 29 per cent to 10.4m euro.

Asia region performance improved markedly, the company said.

Revenue at US$40.3m was up 7 per cent and EBITDA of US$3m increased 56 per cent or US$1.1m.

"Even though we are getting momentum in the bigger countries we are still asking for more from America, Europe and Asia. We still have a lot more work to do," Braid said.

The weaker Kiwi dollar had had little effect on Mainfreight's balance sheet as it traded in US dollars, he said.

The US-China trade war had seen a lot more freight moved before tariffs were enacted in September but it had yet to be seen what effect the trade standoff would have on the company's second half result, he said.

Mainfreight will publish its 2019 full year financial result on May 28.