Freightways applies brakes to forecasts

Courier company Freightways yesterday delivered another record full-year result but says its forecast-busting run is nearing an end, thanks to the slowing economy and higher fuel prices.

In the year to June - its second year on the sharemarket - Freightways said it wrestled market share from rival New Zealand Post, grew its operating revenue 9 per cent and boosted net profit after tax by more than a third to nearly $22 million.

Managing director Dean Bracewell said Freightways had soundly outperformed its initial public offer forecasts since listing in September 2003.

"We've had two very, very strong years off the back of a very positive economy and a whole lot of things combining to deliver good cost control, good margin business, good business mix and no surprises."

Although the June year had beaten initial expectations, the company's prospects for the present period were not as rosy - it expects growth but not at the same rate.

"There's been enough noise in the marketplace about the economy coming off the boil a little bit, and having run this business with 9 per cent growth this year and about 10 per cent the previous year on the top line, we're just saying, please be realistic with your expectations for the coming year."

The company remains comfortable with analysts' forecasts for an after-tax profit before the write-off of goodwill of between $26.2 million and $31.2 million for next year.

"Our strategies are sufficient to deliver within that range [of] forecasts at this early stage of the year," said Bracewell.

Freightways' net profit after the amortisation of goodwill - a measure which will be increasingly used as companies move to international financial reporting standards - was up 28 per cent to $27 million in the June year.

If next year's figure comes in at the lower end of market forecasts, that would be a flat result. A figure at the upper end would be an increase of 15.6 per cent.

Meanwhile, Bracewell said the company's revenue growth was largely thanks to increased volume through its core NZ Couriers, Post Haste Couriers, Castle Parcels, SUB60 and Security Express brands. Price increases and a market share gain also contributed.

So far, higher fuel prices had not affected demand, but the company expected having to raise charges.

NZ Couriers increased charges by 2.5 per cent at the start of June, because of higher fuel and, to a lesser extent, labour costs.

Freightways will pay an 8.5c a share tax-paid final dividend, taking its full year payout to 16c a share, or virtually all its net profit after tax.

Freightways shares fell 4c to $3.28 yesterday in what Hamilton, Hindin, Greene broker James Smalley said was likely a classic case of "sell the rumour, buy the fact", with the market expecting a good result.