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Mainfreight FY profit rises 6.3% on record NZ trading, growth in Australia; team gets bigger bonuses

Tuesday 29th May 2018

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Mainfreight posted a 6.3 percent gain in full-year profit on a record result in New Zealand and growth in Australia and said the strong performance meant it would pay record bonuses to its managers.

Profit rose to an all-time high of $107.9 million in the 12 months ended March 31, from $101.5 million a year earlier, the Auckland-based company said in a statement. Sales climbed to $2.6 billion from $2.3 billion.

Asia was the only region to produce disappointing earnings in Mainfreight's latest year, in what it described as a satisfactory performance and "a strong indication of our continuing success in growing a global logistics business". The company declared a final dividend of 26 cents a share, making 45 cents for the year, up 9.8 percent from a year earlier, and Mainfreight said it would also reward its team with a 7.4 percent increase in their discretionary bonuses to $20.7 million, the highest ever such payout.

"Importantly this growth provides us with the confidence to keep investing in our network and our expansion to more countries," managing director Don Braid said. "We expect to continue to extend our global footprint, and where openings arise we will take the opportunity to establish ourselves in more countries."

In the company's biggest market, New Zealand, sales rose 9.3 percent to $666 million and earnings before interest, tax, depreciation and amortisation rose 8.4 percent to a record $98.6 million. Mainfreight's NZ logistics arm added warehouse capacity and its air & ocean business recorded increased air and sea freight tonnage "across both imports and exports, including perishable airfreight exports."

It said the local transport division faced the most pressure, with congestion at its sites in Auckland, Tauranga, Rotorua, Palmerston North, Wellington, Nelson and Dunedin. 

In Australia sales rose 16.6 percent to $624 million and earnings gained 18 percent to $49.9 million. Mainfreight said it was the best-ever result in Australia with all three businesses recording stronger sales growth.

Sales in Asia rose 32 percent to $84 million while earnings dropped 22 percent to $4.9 million. The company was taking a "back to basics" approach in Asia, having made management changes during the year and the region had "seen this decline reduced during the final quarter, and importantly we are seeing an improvement as we head into the new financial year."

In Europe, sales climbed 16 percent to 336 million euros and earnings rose 3.1 percent to 17.7 million euros. "It is likely that ebitda growth will be subdued in the next 12 months, particularly in Logistics, while additional warehousing costs are absorbed and utilisation is improved as customer contracts are realised," the company said. 

Revenue in the Americas was little changed at $437 million and earnings rose 3.5 percent to $19.2 million. "We remain confident of the momentum we have in the USA, albeit requiring a great deal of patience while we establish a stronger foothold across all four divisions," it said.

Mainfreight's net debt fell to $197 million from $213 million, with the gearing ratio improving to 21.7 percent from 24.8 percent. Capital expenditure was about $65 million and was expected to grow to $105 million in 2019.

Mainfreight shares last traded at $25.75 and have edged up 1.4 percent this year.


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