Freightways (NZX: FRE ) is generally regarded by the market as a well managed company that provides a mixture of organic growth and growth by acquisition, with reliable dividends.
FRE provides express package services throughout New Zealand, with its complementary Information Management division providing data and information storage services. Its express package business delivers approximately 200,000 items each business day through its brands New Zealand Couriers, Post Haste Couriers, Castle Parcels and NOW Couriers.
FRE’s Information Management division includes the New Zealand brands Data Security Services, Document Destruction Services and Archive Security while the Australian Information Management brands include DataBank and Shred-X.
The company’s earnings before interest, tax and goodwill amortisation (EBITA) increased for 11 consecutive years from 1999 to 2009, before dipping in 2010, followed by a bounce-back in the year to 30 June 2011.
FRE’s first quarter results for the quarter ending 30 September 2011 were strong, which sees the company begin the new financial year well. First quarter revenue rose 9% to $93 million, EBITA rose 9% to $14.2 million and net profit of $8 million was up 19%, the highest ever first quarter net profit result since its IPO. The core express package & business mail business performed well during the first quarter, while the higher growth Information Management division again performed well.
Its recent acquisition of Iron Mountain NZ is expected to deliver $12 million of revenue in its first year and the acquisition is also expected to be EPS accretive in its first year. FRE expects to see continued gradual improvements in its markets and it is well placed to benefit when this occurs.
Status: GROWTH BUY
FRE’s shares today traded at $3.31
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