Most of Mainfreight’s profit now from offshore but is it just getting started?

Don Braid, group managing director of Mainfreight. Photo / Natalie Slade

Economists may be gloomy but Mainfreight’s intention to invest $700 million in its global network over the next two years says a lot about how it sees the future, says group managing director Don Braid.

The NZX-listed global transport and logistics company has posted a 66 per cent lift in operating profit to $301.7m on a rise in revenue to $3 billion for the first half of the 2023 financial year.

Net profit for the six months to September 30 was also up 66 per cent, or $86m, at $217m.

Revenue rose on the comparable period last year by $729m or 32 per cent.

The company will pay its shareholders $85.6m, an interim dividend of 85c per share.

Looking ahead, Braid said trading after the half-year end, through the five weeks of October and into November, had seen revenue increase by 2 per cent over the prior year, and profit before tax up 11 per cent.

The company recognised the economic headwinds and declining sea freight rates and volumes leading into the new year, but was confident of trading conditions for the remainder of FY23.

“When you see us investing $700m in the next two years in our network infrastructure, then I suppose you can take from that the confidence we have in our business and the opportunities ahead as we grow the business around the world.”

Braid noted 75 per cent of Mainfreight’s profit came from its overseas operations.

“And the reality is we are still relatively small in those offshore markets with a lot more opportunity for market share growth. Our team is focused on making sure they find that growth and provide us with more opportunities to grow further,” he said.

Mainfreight’s expectations for capital spend for FY23 was $360m.

This included $314m on land and buildings across New Zealand, Australia and the Americas.

A further $347m was estimated for capital expenditure in 2024. It was expected $301m of this would be allocated for the purchase and build of facilities in New Zealand, Australia, the Americas and Europe as Mainfreight looked to expand and intensify its network.

The 2024 capital expenditure was a $154m increase on the previous estimate of $193m. It included land purchases, racking and warehouse fitout, solar and energy management systems and forex impact.

The company said all three of its operations - air and ocean, transport and warehousing - in all five of its global operating regions had contributed to the result.

Operating cashflows were $291.4m, up from $178.4m the previous period, reflecting increased profitability.

Net debt was $26.3m, up from $1.1m at the end of FY22.

Adjusted for foreign exchange, group revenue was up 26.3 per cent and profit before tax up 57.8 per cent. Net profit showed an increase of 57.7 per cent on the previous period.

Mainfreight will provide a trading update in early February. Its FY23 result will be published on May 25.