Mainfreight shares close in on $60 as business laps up local consumer market demand

Mainfreight managing director Don Braid. Photo / File

Mainfreight's six month financial results defied gloomy pandemic economic forecasts as New Zealanders with extra cash from low interest rates and thwarted overseas travel plans spent up on domestic projects and deliveries.

Managing director Don Braid said economists' "doom and gloom" forecasts for the months post-lockdown had not played out for the global transport and logistics company with strongly improved performances of the New Zealand and Australian businesses special highlights of the half year to September 30.

The Asia business had also shown ongoing progress.

Mainfreight's operations in the Americas', a region hard hit by Covid-19, was continuing to improve month by month, closing in on last year's first half, and the European business, while trading behind the same period last year, was showing improved trading since September 30.

Group net profit for the six months to September 30 nudged $73 million, compared to $59m for the same period last year, while revenue lifted 7.2 per cent or $108.3m to $1.6 billion.

The company will pay an interim dividend of 30c per share, 20 per cent up on last year's interim dividend. It expects its full-year result to be "much improved" on last year's.

The shares rose another $1.75, or 3 per cent, to $59.95 and are up 45 per cent over the past 52 weeks.

Strong domestic and international volumes in the New Zealand operation had redressed the impact of the Covid-19 level 4 restrictions in April and May. Profit before tax in this business was up 8.3 per cent at $37.5m, and revenue rose 4.5 per cent to nudge $379m.,

Profit before tax in the Australian business was up 104 per cent or AU$15.6m at AU$30.5m, and revenue rose 11.9 per cent or AU$42.7m to AU$403.2m.

Braid said domestic economic activity in countries served by Mainfreight was strong - "provided you're in the right industry". Demand for freight handling and space was high with fewer aircraft operating and shipping companies downsizing due to the pandemic.

Consumer demand for goods was driving a very contested supply chain and challenging handling capacity.

Group operating cashflows were $188.5m, up from $123m in the prior year, reflecting increased profitability and strong cash collection.

Net debt dived $41.9m to $115.4m, with gearing ratios falling to 10.4 per cent from 14 per cent in March.

Capital expenditure was also trimmed to $54.8m. The company expects capital expenditure for the full year ending March 31 to be in the range of $103m. A further $114m was estimated for capex in the 2022 financial year.

In Asia, profit before tax rose 59.2 per cent to US$3.98m and revenue was up 19.3 per cent at US$42.9m. Air freight growth was helped by Covid-related tonnage and new specialised air freight branches within Mainfreight's network.

The Americas business posted a 1.6 per cent lift in revenue to US$248m, with profit before tax down 13 per cent or US$1.27m to US$8.5m.

Domestic transport operations and the wholesale sea freight business CaroTrans had produced an overall disappointing result in the Americas, the company said.

But there had been good signs of improvement in the past month as Americas' customers reopened manufacturing and warehousing.

In Europe, revenue at Euro193.7m was flat on last year, and profit before tax down 12.1 per cent at Euro7m. This was a poorer-than-expected result but an
improvement was expected through the balance of the financial year.