Mainfreight's profits down but sees market improving

Photo / Sarah Ivey.

Mainfreight's profits have dropped 7.6 per cent for the nine months to the end of December but the freight company says third quarter increases in revenue and profits point to an improving market.

Mainfreight today reported a net profit of $27.26 million for the first nine months of the 2010 financial year, a drop of 7.6 per cent on the same period the previous year.

Consolidated sales revenues for the nine-month period dropped 15.2 per cent to $842.27m. Excluding foreign exchange adjustments the decrease was 16.6 per cent.

However, trading during the third quarter was much improved in all but two business segments when compared to the previous year, and was a marked improvement over the second quarter.

Third quarter saw ebitda levels improve 14.8 per cent over last year. Third quarter results also showed ebitda improved 55.6 per cent and revenues 11.8 per cent over the second quarter's results.

This reflected a combination of seasonal volumes and improved business performance, said group managing director Don Braid.

"It is still our belief that the apparent market recovery remains fragile and we retain a cautious approach."

The fourth quarter has seen trading remain ahead of the corresponding quarter last year, continuing the overall general improvement.

On the New Zealand domestic front improved freight volumes during the December month, which assisted year to date earnings before interest, tax, depreciation and amortisation (ebitda) to $28.63 million, in line with the previous year.

When comparing third quarter performance with the previous year, ebitda improved 21.1 per cent; while a comparison of this year's third quarter to the second quarter showed an improvement of 65.5 per cent.

Revenue levels in the year to date declined 12.6 per cent to $201.9 million. Third quarter revenues improved 11.1 per cent over the second quarter's results.

In the New Zealand international segment, improved air freight volumes and a market share increase assisted an improved ebitda performance of 22.2 per cent to $3.45m on unchanged revenue levels of $78.2m.

Trading in Australian operations was satisfactory and ahead of last year.

Improvements in Australian domestic freight operations saw ebitda improve 60 per cent to $11.79m from the previous year's result of $7.37m, on revenue declining 1.6 per cent to $144.3m.

The Australian international market improved as import volumes increased pre-Christmas. Year to date ebitda increased 19.9 per cent to $5.93 million.

Revenues continued to suffer as international air and sea freight rates remained volatile, said Braid.

The decline in sales revenue was 7.7 per cent to $149.85 million.

Third quarter ebitda performance saw an improvement of 137.9 per cent over the second quarter results and 43.4 per cent over last year.

In the US trading has remained difficult in both the domestic and international sectors.

Revenue levels have continued to decline, falling 29.6 per cent across the US Group operations, while year to date ebitda declined 59.5 per cent to $5.47 million.

Mainfreight USA's operations saw revenues decline year on year by 31.2 per cent to $140.43 million, and ebitda by 165.2 per cent to a loss of $3.11m.

The result was disappointing but Braid said he hoped things in the US would improve.

Revenue levels for Asian operations remained consistent with those of the prior year at $19.89m, a small increase of 0.7 per cent from $19.75m.

Ebitda performance continued to be affected by increased cost structures as our business positions itself for further growth, declining 23.6 per cent to $1.54 million.

A decision on whether a bonus payment will be made is not expected until our year end results have been finalised.

Shares in Mainfreight lifted 10c to $5.90 when the share market opened this morning.

- NZPA