Mainfreight profit leaps 148pc in quarter

Mainfreight is now earning 67pc of its revenue offshore. Photo / Sarah Ivey

Mainfreight Group's profits surged in the three months to June, up 148 per cent on the same period in the previous year to $6.8 million as global demand strengthened.

The removal of prior period abnormals, however, resulted in a profit increase of 69.5 per cent.

Revenue for the listed logistics firm was up 20.5 per cent on the 2009 result to $315.3 million, while operating cash flows were up 13.2 per cent to $15.4 million.

Mainfreight group managing director Don Braid downplayed his firm's results yesterday, saying: "You shouldn't underestimate how poor the first quarter last year was for this comparison."

But Forsyth Barr analyst Rob Mercer said this should not detract from how positive the result was.

"When you look through the quality of the revenue growth and improvement in earnings - it's not a case that it's coming off low numbers," he said. "Our [Mainfreight] forecast for 2011 suggests that the economic recession's only had a very minor impact on earnings."

The company was one of New Zealand's best performers, Mercer said, especially in terms of how well it had dealt with the impact of the financial crisis.

Investors responded to the good news accordingly, with Mainfreight's share price closing up 19c, or 2.9 per cent, at $6.70 last night.

Braid said the company expected to maintain the momentum it gained in the last quarter.

"We expect to do better next quarter and to have a better result next year," he said.

Ebitda in the firm's New Zealand division improved by 17.7 per cent to $6.94 million, an increase of $1.04 million on the previous period. Braid said Mainfreight was now earning 67 per cent of its revenue offshore, and its diversification across global markets was advantageous.

The booming economic environment in China - where the company already has six operations and will open another three over the next 12 months - was beneficial to Mainfreight's business, he said.

Strong sales in Asia, particularly across trans-Pacific trade lanes to the United States and South America, resulted in the company's Asia Division revenue jumping 63.2 per cent to $8.7 million.

"If we're aggressive in our sales campaigns and we're picking up market share [in Asia and the US], then when those economies start to recover we don't need too much [market share] to make our numbers look good."

Trading conditions improved in the United States, where total revenues were up 23.8 per cent to $105 million. In its Australian domestic division, revenue rose 18.7 per cent to $50.1 million, while ebitda increased by 21.5 per cent to $2.39 million.

Sales revenue in its Australian International division was up 27 per cent to $56.1 million. However, Australian ebitda decreased by 22.4 per cent to $1.2 million as margins were affected by intense competition in the Asia-to-Australia freight market.

Braid said increased competition in those routes would not prove problematic in the long term, as margin improvements and better cost management were expected.

The company's bank term loan had decreased slightly from a year earlier, at $110.9 million.