Freightways profit up, despite Chch quakes

NZPA

Monday 15th August 2011

Freightways reported a 7 percent rise to $31 million in full year consolidated net profit excluding non-recurring expenses, as operating revenue rose 7 percent to $353 million.

The result for the year to June 30 was underpinned by improving performance from the core express package and business mail division, along with outstanding performance by the information management division, the company said today.

A final dividend of 7.25c per share is to be paid, compared to 7cps a year earlier.

A one-off expense of $1.3m, or $900,000 after tax, was recorded as direct costs associated with the Christchurch earthquakes, net of insurance proceeds received by June 30 and associated insurance deductibles. Bottomline net profit was up 29 percent from a year earlier to $29.9m.

The company's businesses were hit by both the Christchurch earthquakes and the Queensland floods, Freightways said.

As well as causing lower activity and revenue, the quakes caused considerable damage to the information management business.

Operating revenue rose 5 percent at the express package and business mail division to $278m, with earnings before interest, tax, depreciation and amortisation (ebitda) up 2 percent to $50m.

Strongly improving performance at the half year, which included double digit earnings growth in the second quarter, stalled due to the February earthquake in Christchurch, Freightways said.

Towards the end of the financial year, volumes recovered in most businesses and in the fourth quarter double digit earnings growth was achieved again.

Volumes from many customers increased, and the company gained market share and introduced modest price rises.

While Freightways expected market segments to continue to gradually improve throughout 2012, it said the express package and business mail division continued to rely on growth among its existing customer base.

In the information management division full year revenue was up 15 percent from a year earlier to $76m, with ebitda up 13 percent to $17m.

During 2011, the company had leased more information management capacity in Auckland, Wellington, Sydney, Melbourne, Adelaide and Perth.

The increased lease costs had some initial detrimental effects on margins, but those were expected to be restored as the new capacity was used.

Demand for the document management services was ahead of expectations, Freightways said.

It was expecting capital expenditure of $17m for 2012, including a $4m depot refurbishment at the main Auckland site to accommodate the relocation of NOW Couriers.

Cost savings as a result of that project were expected in the 2013 financial year.

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