Mainfreight managing director Don Braid says the company is resilient. Photo / Supplied
Mainfreight managing director Don Braid says the company is resilient. Photo / Supplied
Global logistics company Mainfreight posted a slump in net profit and revenue for the first half of the 2024 financial year, highlighting a downturn in freight demand and reduction in airfreight and ocean freight rates.
The result is, as widely expected, the outcome of pandemic-driven high freight volumes and ratesreturning to what have been described as more normal levels.
The NZX-listed company said net profit was down 42.6 per cent to $124.5 million for the half year to September 30.
Profit before tax at $174.8m declined 42.1 per cent on the previous corresponding period.
Revenue for the Auckland-based company fell 21.6 per cent to $2.36 billion. The results are unaudited.
Group managing director Don Braid told the Herald it had been a difficult time but the half year result was on a par with the 2022 half year performance.
“2022 was a big year for us”.
He said Mainfreight had been through some “pretty tough times” such as the Global Financial Crisis before but adjusted accordingly and got through.
While the company was impacted by global economic cycles it wasn’t a cyclical business, he said.
“Look at our growth trajectory over the years. If you back to 2019, not that long ago, this profit is 100 per cent up on that.
Mainfreight says the result was tough - but expected. Photo / Supplied
“We really are continuing to be a growth company, continuing to find our feet around the world among some of the biggest logistics players in the logistics circuit.”
The company will pay a dividend of 85c per share with payment on December 15.
Employee numbers had fallen by 500 since March but the company attributed that to “natural attrition”.
Adjusted for foreign exchange impact, group revenue was down 23 per cent, profit before tax down 42.5 per cent and net profit reduced by 43 per cent.
Don Braid says Mainfreight has a big, strong business in Australia.
The company said the result reflected a downturn in freight demand and reduction in airfreight and ocean freight rates.
Inflation also increased Mainfreight’s costs, and net margins reduced as a consequence, the company said.
“This half-year result to September is one of our toughest, when compared to the prior period,” the company said.
“Whilst this has been well-signalled, we now see a more ‘normalised’ trading environment in front of us.”
The macro trading environment was slow but Mainfreight’s sales level and opportunities provided confidence along with domestic trade improvements in Australasia, the company said.
Capital expenditure for the 2024 and 2025 financial years would reduce by $113m from previous estimates, from $676m to $563m. This was due to building delays and re-evaluation of development projects.
“We expect our second six months of trading to improve, albeit marginally, and remain confident of our medium to long-term growth prospects,” the company said.
It announced the retirement of chief financial officer Tim Williams, who has been in the role since Mainfreight acquired Daily Freightways in 1984, and prior to that, held finance roles for Daily Freightways for 10 years.
Braid said the company had “work to do” in its US and European operating regions.
“I’d like to see an improvement but there was a time not long ago when we relied on New Zealand for our profit sanctuary and now we are making reasonable money offshore, we think about our profit sanctuary now being New Zealand and Australia with a large business doing really well in Aussie.
“We are continuing to grow our footprint round the world. Having the opportunity to open in India in October was an exciting time.”
Revenue was down in all of Mainfreight’s global operating regions.
The New Zealand recorded a 13.6 per cent fall in revenue to $557m, with profit before tax down 18 per cent at $61.1m.
In Australia, revenue was down 9.2 per cent at A$633m ($685m) and profit before tax fell 10.6 per cent to A$6.5m ($7.04m).
Revenue for the Americas declined 42.3 per cent on the previous corresponding period, settling at US$325m ($549m). Profit before tax was down 79 per cent at US$12m ($20m).
The Americas division was Mainfreight’s poorest performer.
Europe revenue fell 13.7 per cent on the previous period to E282m and profit before tax was down 46.6 per cent.
Ongoing slowing freight demand in Asia resulted in a 51.3 per cent fall in revenue with profit before tax down 58.8 per cent.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
