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Mainfreight is vowing to press ahead with overseas expansion plans after its international interests helped boost its underlying profit 5.5 per cent during the listed transport firm's traditionally weakest quarter.
Mainfreight posted a first-quarter net surplus of $67.3 million, as a result of selling two businesses - Lep
and Pan Orient - for $61.2 million.
Without that figure, however, first-quarter net profit rose to $5.8 million from $5.5 million the year before.
Although revenue fell, the company said all its divisions improved profitability during a quarter marked by challenging trading conditions.
Excluding foreign exchange adjustments, revenues from the company's continuing businesses grew 4 per cent, while earnings before interest, tax, depreciation and amortisation improved 6.1 per cent to $11.9 million.
"New Zealand has held its own in a tough environment and our ongoing profit improvements are coming from our investments offshore," said managing director Don Braid.
Revenue from Mainfreight's New Zealand domestic business dropped 2.2 per cent, "largely as a result of reduced fuel adjustment factors". The company said domestic trading remained flat into the second quarter.
Braid said that despite New Zealand's challenging environment, Mainfreight would look at increasing the services it offers and aggressively boost its domestic market share.
He said that although the Government needed to provide a "far greater positive contribution" to business in the home market, reduced spending and more internationally competitive tax rates would not alter Mainfreight's commitment to expand offshore.
"To grow our business we need to be in those larger markets offshore and no matter what the Government might do with policy they won't be able to replicate the size of the markets that we have available to us in Australia, US and China."
Excluding foreign exchange, revenue from the Australian domestic market rose 13.7 per cent to A$27.7 million ($32 million).
Australian international revenues grew 10 per cent from A$24.6 million to A$27 million.
In the US, where Mainfreight is conducting due diligence on one acquisition and assessing several others, international revenue rose 19.1 per cent to US$21.2 million The share of earnings from Mainfreight's Asian business, although still small, grew 25.7 per cent to $300,000, excluding foreign exchange.
The sale of Mainfreight's interests in LEP and Pan Orient allowed the company to pay off long-term loans, putting it in a positive net cash position of $18.6 million.
Forsyth Barr analyst Rob Mercer said Mainfreight was still seeing "reasonable earnings" in New Zealand, which he said was at the tail end of an economic slowdown.
Shares closed down 21c at $6.99 yesterday.
