Mainfreight shares hit an all-time high of $46.95 in early trading following a strong trading update and upbeat annual meeting yesterday.
Shares of the global logistics firm gained 7 per cent when the market opened this morning, and are up 10.5 per cent so far this year, valuing the business at $4.27 billion.
Yesterday, Mainfreight said it had turned around slowing progress in Australia, with the division lifting pre-tax profit 167 per cent to A$17.9 million in the 17 weeks ended July 26 on a 13 per cent increase in revenue to A$287.9 million. The strong result boosted overall profit before tax by 20 per cent for the period.
Group managing director Don Braid told approximately 150 shareholders at yesterday's meeting that the New Zealand unit was expected to deliver second-half earnings in line with the same period last year.
Analysts at Jarden said the result was "remarkable" and upgraded their forecast for net profit in the March 2021 year by 25 per cent, due to increasing revenue in Australia and NZ.
That was offset by updated foreign exchange assumptions leading to modest downgrades in expected revenue from the Americas and Asia. Jarden increased its target price on the stock to $45 from $37.50.
Shareholders welcomed the trading update with applause, but quietened down when Braid confronted growing complaints over the firm's governance.
The governance issue
Braid hit back at criticisms this week by the NZ Shareholders' Association, which spoke out against the re-election of one of the firm's directors.
The NZSA said while members should make up their own mind, it would vote undirected proxies against the re-election of director Bryan Mogridge, citing disappointment with his other directorships at Rakon and Pyne Gould Corp.
"It is past the time for Mr Mogridge to move on. Surely there is fresh talent who can offer the company more," said the association, which had also moved against Mogridge when he last came up for re-election in 2017.
It was the only sore point in an otherwise upbeat presentation from Braid who said "I'm sorry about this, but it has to be said.
"There's so much criticism of our governance, we cannot put up with it any longer. We are proud of the way we run this business, it is different from a lot of others," he said.
He added that the firm's management was "not pixie dust, it doesn't just get waved around by whoever sits at the table. It is worked on hard everyday."
After the meeting, Braid told BusinessDesk it was "not a board of bloody old mates."
"The advice to their members was personal. It referred to Bryan's previous directorships, well that's got nothing to do with the Mainfreight experience," he said of the NZSA's letter.
"The thing that makes us different is our culture and the way we do things," he said. "We need tenure across the table because we promote from within and what would happen to management if we were changing the board every five years."
While NZSA representative Alan Best spoke during the meeting, he did not address Mogridge's appointment. Shareholder Coralie van Camp did offer her support.
"I'm in support of Bryan. Last time he stood for re-election I gave him a hard time, and this is an outstanding result from all of you, so I would like to see him stay," she said.
Mogridge was re-elected with 79.5 per cent voting in favour.
Change of scene
Held at Auckland's Eden Park instead of the usual Villa Maria, Braid took the opportunity to address shareholders from a blue carpet rolled out at the venue, stepping out from the usual podium for a TedTalk-esque, unscripted talk through the company's progress.
Braid said the company had given back some $10 million in wage subsidies and ensured there were no redundancies. Management was now feeling so confident it decided to boost pay for its people - Braid refuses to use the word employees or staff.
"There are a lot of people out there working on 80 or 50 per cent of their salary, but we put through on 1 June, a 3 per cent increase in New Zealand and Australia and 1.6 per cent in Asia. Europe and America we will look at in September," Braid said.
The company has also started its annual process of sending out bonuses, with 4,771 people qualifying this year for their share of $27.3 million.
As has become the norm, chairman Bruce Plested ventured into wider social issues plaguing the nation, using his address to advocate for a new approach to fixing local water shortages by getting businesses to collect all the rainwater off their facilities.
Plested noted that at one Mainfreight facility in Auckland the company caught 33 million litres of rainfall each year, of which 2 million was used for flushing toilets, irrigating gardens, washing trucks, providing showers and for its cafe. The rest was put into the storm water system.
"Perhaps the most important advance would be for the business community with large roofs and in areas with fresh water risk, to become self‐sufficient for their own water use."
The businessman also suggested that there was an opportunity for councils and government to look at buying appropriate motels for the homeless and making them permanent state accommodation.