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Mainfreight volumes slow in 3Q

Tuesday 14th February 2012

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Mainfreight, the transport and logistics company, reported a weaker-than-expected third quarter, with no growth in volumes and a December performance that lagged the firm’s estimates. It still managed a record profit for the nine-month period.

In the third quarter “freight volumes and returns only matched prior year levels,” Mainfreight said in a statement. “December trading, in particular, was below our expectations.”

Shares of Mainfreight fell about 7 percent to $9.63 on the NZX today, having increased from $5.76 two years ago. Before today, the stock was rated ‘outperform’ based on a Reuters poll.

The company doesn’t break out third-quarter results. For the first nine months profit rose 35 percent to $46.75 million and sales rose 35 percent to $1.37 billion. That implies a third-quarter profit of $17.7 million, down from $18.1 million a year earlier.

Mainfreight said the fourth quarter “has begun positively” and the company is “confident of further improvements and increased trading through to our year end.”

“In addition, market share gains have been made across most business units providing increased confidence in trading levels through 2012 and 2013,” it said.

The company’s New Zealand domestic business, its biggest by earnings, reported a 14 percent gain in earnings before interest, tax depreciation and amortisation to $35 million in the first nine months of the year, with market share gains in food and beverage products, though December trading” only matched that of the year prior.”

Mainfreight’s New Zealand International division lifted nine-month sales by 9.9 percent to $100.3 million and EBITDA gained 11 percent to $4.37 million.

Australian domestic operations lifted sales by 13 percent to A$150.3 million, with improved operating margins helping lift EBITDA by 38 percent to A$14.3 million. Australia International revenue fell 5.7 percent to $137.9 million while EBITDA dropped 3.3 percent to A$4.5 million.

“A disappointing peak season from Asia and intense competition in the shipping sector saw freight rates decline, inhibiting revenues and margin performance,” though the company has won “a number of sizeable accounts.”

In the US, sales rose 8.9 percent to US$20.4 million and EBITDA climbed 37 percent to US$10.5 million.

Mainfreight USA’s sales rose 15 percent to US$149.6 million and EBITDA quadrupled to US$4.2 million. CaroTrans eked out a 1.1 percent gain in sales to US$100.2 million while EBITDA fell 5.9 percent to US$6.3 million.

Asia International revenue rose 3.1 percent to US$21.96 million and EBITDA fell 11 percent to US$1.72 million, reflecting “reduced shipping rates, volumes, excess capacity and increased operating costs from our network expansion.” Trading in Asia in the fourth quarter “has started slowly, with activity dented by the Chinese New Year.

In Europe, where Mainfreight acquired the Wim Bosman Group, sales were 181.8 million euros, generating EBITDA of 12.7 million euros. Trading in the second and third quarters “was below our expectations,” Mainfreight said.

The company cited poor performance at its Belgium Transport operations and its Air & Sea International business, and reduced use of its ‘s-Heerenberg Logistics operations.

“We remain satisfied with our investment and are excited by the growth opportunities Wim Bosman presents, irrespective of the European economic crisis,” it said.


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