Mainfreight volumes slow as December trading lags

File photo / Sarah Ivey

Mainfreight, the transport and logistics company, reported a weaker-than-expected third quarter, with no growth in volumes and a December performance that lagged the firm's estimates.

It still managed a record profit for the nine-month period.

In the third quarter "freight volumes and returns only matched prior year levels," Mainfreight said in a statement. "December trading, in particular, was below our expectations."

Shares of Mainfreight fell about 7 per cent to $9.63 on the NZX today, having increased from $5.76 two years ago. Before today, the stock was rated 'outperform' based on a Reuters poll.

The company doesn't break out third-quarter results. For the first nine months profit rose 35 per cent to $46.75 million and sales rose 35 per cent to $1.37 billion. That implies a third-quarter profit of $17.7 million, down from $18.1 million a year earlier.
Mainfreight said the fourth quarter "has begun positively" and the company is "confident of further improvements and increased trading through to our year end."

"In addition, market share gains have been made across most business units providing increased confidence in trading levels through 2012 and 2013," it said.

The company's New Zealand domestic business, its biggest by earnings, reported a 14 per cent gain in earnings before interest, tax depreciation and amortisation to $35 million in the first nine months of the year, with market share gains in food and beverage products, though December trading" only matched that of the year prior."

Mainfreight's New Zealand International division lifted nine-month sales by 9.9 per cent to $100.3 million and EBITDA gained 11 per cent to $4.37 million.

Australian domestic operations lifted sales by 13 per cent to A$150.3 million, with improved operating margins helping lift EBITDA by 38 per cent to A$14.3 million. Australia International revenue fell 5.7 per cent to $137.9 million while EBITDA dropped 3.3 per cent to A$4.5 million.

"A disappointing peak season from Asia and intense competition in the shipping sector saw freight rates decline, inhibiting revenues and margin performance," though the company has won "a number of sizeable accounts."

In the US, sales rose 8.9 per cent to US$20.4 million and EBITDA climbed 37 per cent to US$10.5 million.

Mainfreight USA's sales rose 15 per cent to US$149.6 million and EBITDA quadrupled to US$4.2 million. CaroTrans eked out a 1.1 per cent gain in sales to US$100.2 million while EBITDA fell 5.9 per cent to US$6.3 million.

Asia International revenue rose 3.1 per cent to US$21.96 million and EBITDA fell 11 per cent to US$1.72 million, reflecting "reduced shipping rates, volumes, excess capacity and increased operating costs from our network expansion."

Trading in Asia in the fourth quarter "has started slowly, with activity dented by the Chinese New Year.

In Europe, where Mainfreight acquired the Wim Bosman Group, sales were 181.8 million euros, generating EBITDA of 12.7 million euros. Trading in the second and third quarters "was below our expectations," Mainfreight said.

The company cited poor performance at its Belgium Transport operations and its Air & Sea International business, and reduced use of its 's-Heerenberg Logistics operations.
"We remain satisfied with our investment and are excited by the growth opportunities Wim Bosman presents, irrespective of the European economic crisis," it said.