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Freightways first-half profit jumps 20%, lifts dividend

Monday 13th February 2012

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Freightways posted a 20 percent jump in first-half profit on revenue gains across all is businesses, giving the courier and information management company room to pay a higher-than-expected interim dividend.

Net income rose to $18.97 million, or 12.3 cents a share in the six months ended Dec. 31, from $15.8million, or 10.3 cents a year earlier, the Auckland-based company said in a statement. Sales rose 9 percent to $192 million.

Profit included a one-time $700,000 net gain from a Christchurch earthquake insurance claim and excluding non-recurring items first-half earnings rose to $18.3 million, beating the $17.6 million estimate from brokerage Forsyth Barr. Shares of Freightways fell 0.8 percent to $3.75 on the NZX today and have climbed 17 percent in the past year, reaching a four-year high of $3.86 last week.

The company gets about 80 percent of sales and earnings from its core express package and business mail unit, which operates the New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, SUB60, Security Express, Kiwi Express and DX Mail brands. In the first half the unit lifted revenue 6 percent to $149 million and earnings before interest, tax, depreciation and amortisation by 8 percent to $28 million.

“Increasing volumes from many existing customers and price increases underpinned the revenue growth in this division,” the company said.

Sales at its information management unit, which has the Online Security Services, Archive Security, Document Destruction Services, Data Security Services, DataBank and Shred-X brands, climbed 19 percent to $44 million, while EBITDA gained 9 percent to $9 million.

During the first-half Freightways acquired the New Zealand business of Iron Mountain and Filesaver in Sydney and the two businesses are “tracking to expectation.”

The company will pay a first-half dividend of 8.5 cents a share, up from 7.25 cents a year earlier. Analysts had expected an interim payment of 8 cents.

The company didn’t give a specific forecast for the full year.

“Based on our experience in the first half of the 2012 financial year, we expect to see continued gradual improvement in the market segments we operate in,” it said.

Capital spending in 2012 will include a one-off cost of $4 million to refurbish the company’s main Auckland site to accommodate its NOW Couriers operations and costs associated with recent acquisitions.

“Overall, cash flows are expected to remain strong throughout the remainder of the financial year,” it said.


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