Mainfreight's share price rallied sharply after the logistics and transport company produced a 10.6 per cent increase in net profit for the year and an encouraging post-balance-date performance.
By mid-afternoon the stock was up $2.00 or 5.5 per cent at $38.00 - nearly $10 higher than its March low of $28.10 - after reporting a $156.1 million net profit for the March year.
Unlike many other companies who have withheld their dividends, Mainfreight maintained its final payout at 34c - unchanged from the previous year's final dividend.
• Premium - Mainfreight declares flat dividend, hands back $11m wage subsidy
• Mainfreight sees growing NZ freight volumes as first half profit rises
• Mainfreight sells Owens' big earners
• Mainfreight forecasts stronger second half, rules out growth by acquisition
As the end of its financial year was approaching, the extent of the Covid-19 problem and the impact of lockdowns was only starting to become evident, so analysts have placed a great deal of importance on how the company has fared since the March 31 balance date.
Fisher Funds' senior portfolio manager Sam Dickie said Mainfreight had gone the extra distance to provide detail where it mattered most - the depths of the Covid-19 lockdown.
"It was a solid result, but what was much more interesting was the seven-week post-balance-data update, and the outlook comments that they gave for post March 31," Dickie, who has Mainfreight in the portfolios he manages, said.
In the first week of April - in the depths of lockdown - revenue was down 40 per cent compared with the same week a year earlier.
Over the first seven weeks, however, that number had improved to minus 16 per cent, and the last two or three weeks had shown a slight gain over the same time last year.
"That second derivative improvement is very, very powerful, and it moves markets, so that is the key takeaway for me," he said.
In Australia, where the government's Covid-19 reaction was less "draconian" the company had taken market share from almost all the major players.
In the first week of April, revenue was up 9 per cent, up 13 per cent for the first six weeks, and up 15 per cent over the last two or three weeks.
"Like everyone, they do not have a crystal ball as to how all this pans out over the next six to 12 months, but from a balance sheet perspective, they are well positioned."
Mainfreight's decision to maintain its dividend reflected the company's cautious optimism for the future, he said.
"The result was backwards looking as it always is, but much more interesting was the seven-week update," he said.
"In a very untransparent, murky world, it's very hard for anyone of us to see what is around the corner, but these guys have been extremely transparent," he said.
Reflecting its improved trading levels post Covid-19 shutdown, the company returned the $10.6m wage subsidy it received in April on behalf of its 1,526 New Zealand staff.
Managing director Don Braid said the pandemic had had a significant impact and would continue to affect economic conditions as slower consumer demand sees freight volumes and supply chain activity contract.
"In the first seven weeks of trading in the 2021 financial year, Mainfreight has adapted as well as we would have expected to the erratic trading conditions," he said in a statement to the NZX.
"We have been positively surprised at the levels of activity in New Zealand, Australia, Asia, and some parts of Europe, and this has been reflected in our estimated weekly profits in April and May.
"The Americas region has seen less activity than others and appears to be the one region that will take more time for us to see a significant level of recovery."
The company, reporting under the NZ IFRS 16 standard for the first full year, said earnings before interest, tax, depreciation, amortisation, abnormal items and lease costs were at $399.3m, from operating revenue of $3.1 billion.
Additional reporting - BusinessDesk