Freightways' fortunes on the mend

Dean Bracewell. Photo / Martin Sykes

With his firm showing signs of recovery from a challenging recession, Freightways managing director Dean Bracewell says he is feeling cautiously optimistic about the listed courier company's outlook.

Freightways announced a lift in profit and revenue in its half-year report yesterday on the back of increased volumes from its existing customers, particularly during the final quarter of last year, and the successful execution of service quality, cost management and growth strategies.

This time last year Freightways reported an 8 per cent drop in net profit for the six months to December 31, 2009, as its revenue dipped below a previous year for the first time.

But yesterday Bracewell said Freightways' fortunes were improving, although the retail sector still lagged behind others the company serviced.

"We're still not firing on all cylinders," he said, adding that an improvement in retail would be the "icing on the cake".

Freightways' revenue rose 7 per cent to $176.2 million in the six months to December 31, compared with the previous corresponding period; net profit lifted 8 per cent to $15.8 million.

Sales in the express package & business mail division, which includes New Zealand Couriers and contributes 80 per cent of the firm's earnings and revenue, was up 5 per cent on the previous period to $140 million.

The company said that if revenue growth in that division were maintained, similar earnings improvement seen in the six months to December could be expected in the future.

Revenue rose 14 per cent in Freightways' information management division, which has brands including Document Destruction Services in New Zealand and Shred-X in Australia, to $37 million.

"We do think we have experienced some improvement in the marketplace and we would expect that as that continues Freightways will also be able to improve its position," Bracewell said.

It was too soon, however, to predict whether the pickup in volumes would continue.

"There's a lot of noise out there that the overall market isn't lifting to the extent that we're seeing it [lift] in some of our businesses, so we've got to be a little bit cautious and realistic."

Forsyth Barr analyst Rob Mercer said yesterday's result was slightly ahead of his expectations.

"Freightways has been pretty resilient to the downturn," Mercer said. "It's just managing its way through the current conditions. At the moment we're feeling more confident about good revenue and profit growth in 2012."

The company's debt and equity ratio remained at around 49 per cent.

"We're well positioned as far as the balance sheet goes," said Freightways chief financial officer Mark Royle.

Bracewell said the company was on the lookout for acquisition opportunities beyond Australasia.

"If you've got a product and you think there's demand for it and an opportunity to establish a service in a different country, then certainly we'll look at it."

Freightways acquired a small, New Zealand-based international postal service provider in November which was then merged into its DX Mail business.

The acquisition initially cost $1.75 million, but the company expects the total cost to be $3 million, with the balance set to be paid on the completion of "financial hurdles" through to June 2013.

A dividend of 7.25c a share will be paid on March 31. Freightways shares closed up 7c at $3.27 yesterday.