Recession leaves its mark on Freightways

Dean Bracewell says the express package and business mail divisions have been resilient. Photo / Martin Sykes

Freightways has reported a full-year profit of $23.2 million - a 33 per cent reduction on the year before - showing the impact of the recession continues to affect the listed courier firm's bottom line.

However, when an abnormal tax charge of $5.7 million was removed, the profit was $28.9 million, a drop of only 2 per cent.

While Freightways' earnings before interest, tax, depreciation and amortisation (ebitda) of $63.7 million were 2 per cent down on the normalised result for the year before, second-half ebitda (from January 1 to June 30, 2010) was up by 5 per cent.

Freightways shares rose 2.6 per cent yesterday to close at $2.75.

Chief executive Dean Bracewell said: "We've come through and seen improving business performance."

However, Freightways had not yet experienced an "across-the-board" improvement in all its divisions.

Bracewell said the express package and business mail segment had proved resilient through what had been a tough year, generating an operating revenue of $263.5 million - down 4 per cent on the normalised previous period.

Freightways' information management division was growing, Bracewell said, reporting an operating revenue of $66.2 million, up 9 per cent on the previous year's normalised result.

"[Information management] is aided by the investment we've made over recent years ... we now have the business in all major states of Australia."

Deutsche Bank analyst Geoff Zame said Freightways' improved second-half results had grown from a particularly low base, but there was no reason why better conditions would not continue.

Zame said Freightways needed a general improvement in the economy for its fortunes to improve significantly.

"I think the pricing environment has improved. The question now is just whether the volumes continue to recover."

During the year Freightways launched two new sub-brands. One - "Stuck" - has been positioned to take advantage of a demand for hard-to-deliver express freight jobs.

The "Pass the Parcel" service targets Trade Me users.

Bracewell said the company had spent a year working closely with Trade Me to get the new service up and running and expected it to become profitable within the next 12 months.

"Online shopping is continuing to grow. Over time it will become a lot more significant for the company."

He said an Independent Access Committee was being established to govern how, and at what price, postal operators such as Freightways could access NZ Post's delivery network.