Mainfreight's March-year net profit drops 33pc

11.30am

Transport and logistics company Mainfreight Ltd said its March year net profit dropped 33 per cent to $5.97 million.

Operating revenue, including 80 per cent-held Owens group, rose 58 per cent to $660 million and pre-tax operating profit fell 24.5 per cent to $11.1 million.

Earnings per share fell to 7 cents from 11.2 cents.

The company said the net surplus was up 33.2 per cent at $12.0 million excluding the trading result of Owens Group and purchase related costs.

Owens posted a March year net loss of $5.8 million against a previous year loss of $636,000.

The consolidated share of Owens produced a net deficit of $4.540 million plus acquisition costs of interest and goodwill amortisation of $1.5 million.

Owens trading results included restructuring costs after tax of $1.521 million. The balance of $3.019 million included $2.90 million of losses from Owens business units currently being divested or merged.

The largest contributor to these losses was the Owens Australian International business, now bought and merged into Mainfreight International Australia.

Excluding foreign exchange currency movements and acquisition revenues, sales increased by 10.70 per cent.

Mainfreight said the divestment programme of non-core or loss-making Owens businesses was progressing satisfactorily.

Businesses being sold include Container Services and Cooltainers divisions, Rural Livestock and Grain Cartage and Shipping Agencies.

Preferred bidders had been selected to complete sales and purchase documentation.

Should all sale transactions be successfully completed, the total disposal proceeds including a $5.4 million capital note, are expected to be "well in excess of $20 million".

These transactions are expected to be completed within the next six to eight weeks.

The company said it would pay a final, fully-imputed dividend of 3.5 cents per share on July 23. The final dividend compares to 2cp last year.

Mainfreight said that in light of the satisfactory progress being made with the sale of the Owens surplus assets, it had decided to abandon a special capital-raising programme.

"This does not rule out the possibility of a future rights issue but targeted at growth rather than debt repayment."

Mainfreight said the cost of fuel was neutral to its business with increases passed on to customers and owner drivers in the form of surcharges.

"Mainfreight does not expect there to be any adverse effect on our annual results from the high fuel prices."

During the year, property sales totalled $7.8 million.

Mainfreight said that most of the abnormal items and restructuring costs at Owens were in existence prior to Mainfreight's acquisition.

Owens Transport and Owens International Freight in New Zealand as well as the Pacific Island freight forwarding operations of Pan Orient were being retained while the Owens Australian International operations had merged with Mainfreight International.

"While the organisation of Owens has brought a short term negative impact to our 2003/2004 year end net result, the medium to long term opportunities are certainly positive and will reflect in improved returns for our company," Mainfreight said.

The company said its New Zealand domestic revenues grew 14.7 per cent to $184.6 million while ebit (earnings before interest and tax) rose 28 per cent to $20.4 million.

New Zealand international revenues were steady and ebit rose 36.4 per cent to $2.5 million.

Australian domestic revenues excluding foreign exchange movements improved 17.4 per cent but ebit declined to negative $5.5 million.

Mainfreight said that while Australian operations were disappointing, "significant management directional changes made during 2003 have reversed the declining trends of the previous years".

Australian international revenues lifted 11 per cent to $160.8 million following the merger with Owens International in February. Ebit rose 15.5 per cent to $4.6 million,

US international revenues improved 25 per cent to US$46.5 ($75 million but ebit declined to US$265,000 as a result of lower import volumes because of the weaker US dollar.

Group operating cash flow was steady on $16.8 million despite the reduction in the group's net surplus.

Mainfreight shares last traded at $1.83, having traded between $1.20 and $1.97 in the past year while Owens shares last traded at $1.12, having traded between 85 cents and $1.20 in the past year.

- NZPA