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Mainfreight warns of softer second half, flat earnings

Thursday 21st March 2013

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Mainfreight, the international logistics firm, is warning its operating earnings will be flat for the full financial year, with the second half weaker than the first six months.

The company's earnings before interest, tax, depreciation and amortisation for the year to March 31, due for release May 29, would be roughly the same as last year's $138 million, Mainfreight said in a trading update relating to the last three months of the current financial year, released to the NZX.

Managing director Don Braid gave a range of $137 million to $139 million, compared with a current market consensus for the full year of $146 million.

The shares fell 3 percent to $11.40 following the announcement.

Excluding its recently acquired European businesses, Mainfreight recorded a 15 percent EBITDA increase in the first six months of the year, but this had slowed to between seven and nine percent in the second half, reflecting mixed trading conditions across its global operations.

"Revenue levels are expected to be in a range of $19 billion to $1.95 billion, and net profit excluding abnormals to be in a range of $65 million to $67 million," the company said in its NZX statement. "Abnormal one-off costs are estimated to be $2.1 million after tax and consist mainly of costs associated with brand protection in Europe."

New Zealand earnings remain ahead of last year's, although "below the level of improvement" reported in the first half. Australia is similar, with earnings running well ahead of last year year's but slowing because of higher overheads and lower custom.

In the US, trading is described as "variable" and slower in the last three months of the year, while European trading conditions are improving as the Eurozone economy starts to recover, although improvements are occurring more slowly than anticipated.

"Further improvements are expected in the 2014 financial year."

The outlook for the group as a whole in 2014 remains "positive", the company said.

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