Mainfreight says it ‘should have done better’, frets about government’s intentions for rail

Mainfreight says after two years of "exceptional" freight tonnage, it's back to a normalised trading environment. Photo / Alex Cairns

The red letter numbers were down and “we weren’t quite on top of our game” but Mainfreight still grew its business in the 2024 financial year, says the global logistics company’s managing director Don Braid.

As previously signalled to the market, Mainfreight’s profit before tax and revenues for the March 31 year were down on FY23. Before-tax profit declined 33 per cent to $395.4 million and revenue dipped 17 per cent to $4.72 billion.

However total air freight volumes moved were up 4.5 per cent and sea freight containers by 4.7 per cent.

“We have grown a larger business, attracted more customers and increased our operational capacity,” Braid said.

“However our ability to convert this to more meaningful long-term profitability during this past year has been disappointing. No matter the prior year’s record performance, we should have performed better.”

Asked how, Braid told the Herald “there were little pockets where we could have done better”.

“We should have, and we could have, we just weren’t quite on top of our game. We could have been better with fewer warehouses, we could have perhaps used rail more than road in New Zealand.

“I think the key is that if you compare our 2021 result to the 2024 result and take our two big congestion years of 2022 and 2023, we’ve really developed a bigger business with more customers, more locations, more people, more sites.”

The Auckland-headquartered company, which during the year increased its global brand network by six to 337 branches, will pay a final dividend of 87c a share, flat on last year’s offering.

Jarden Securities said in a note the result was in line with expectations with some unders and overs, notably a better performance in air and ocean operations, offset by weakness in US activity.

“While full-year F24 profit before tax of $163.3m was down 44 per cent on FY23, half-on-half figures show a clear change in momentum with 2H24 up $15m (20 per cent) on the first half. Volumes lifted 5 per cent in the year, while higher freight rates linked to Red Sea disruption likely provided some benefit in 4Q24 and into the current year,” Jarden analysts said.

Net capital expenditure was $254m, with spending on property accounting for $128m.

The company expected capex to the end of 2026 to total $509m, of which $390m is related to property, warehouse racking and fit-out costs.

During the year the branch network increased to 337 branches and Mainfreight opened in Mumbai, India, taking its country locations to 27.

Operating cashflows fell from $757m to $505m.

Due to many branches contributing less profit than in FY23, the discretionary bonus to qualifying employees would total $25m, 68 per cent or $55m down on that paid last year.

New Zealand operations revenue profit before tax was down 12.2 per cent at $148.7m. Four new warehouse sites were planned for construction and three new transport sites were being built in Auckland, two of which would be operation mid-this year.

Braid said as a significant user of rail throughout New Zealand, Mainfreight was “unsettled” by the “fiasco” around the future of the Cook Strait rail ferry services and rail service south of the Waikato.

Don Braid, Mainfreight managing director, backs rail's efficiency for moving freight around New Zealand.

The loss of rail services between the North and South Islands would result in Mainfreight adding 5700 more truck and trailer journeys a year.

Braid doesn’t believe the Government’s plans for the ferries will include rail-served vessels.

“What we’ve asked them is as long as we can rail into and out of ports for the ferries, then we’re ok with whatever they decide to do, as long as they get on with it and we don’t find the ferries run out of lifetime use,” he said.

“That worries us and we have told them so. Rail is an efficient means to move freight around this country.’

Braid said the company had had discussions with the independent committee currently advising the Government on its options.

“What also worries us is when you read Simeon Brown’s (Minister of Transport) document, he only talks about rail freight between Hamilton, Tauranga and Auckland. There’s an enormous amount of freight that travels by rail across the width and breadth of the country.

“We would urge them to be thinking seriously about rail as an ongoing mode for freight in New Zealand.”

On outlook, Braid said the trading environment was demanding.

“Supply chain management has emerged as a critical strategic decision among our customers. They now seek greater resilience and are diversifying their supply chains. We continue to attract new customers ... and we are confident of ongoing growth.

“We had two years of exceptional freight tonnage and now we’ve got to get back to doing what we do best.

“It’s back to a more normalised environment ... we’ve just got to work harder and find our way around all the challenges and geopolitical tensions. We’ve done that before and we’ll do it again.”

Mainfreight will announce its results for the first half of the 2025 financial year on November 13.

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.