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Daily ShareChat: Freightways

By Jenny Ruth

Monday 22nd February 2010

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 Jenny Ruth

Courier company Freightways first-half results show early signs of a turnaround in parts of the express package business while the information management operations proved resilient but the market was disappointed, says ASB Securities analyst Florian Burch.

Freightways reported a 14% drop in net profit to $14.5 million for the six months ended December.

"Express package volumes have become less volatile, perhaps indicating the beginnings of a turnaround. Volumes were down in parts but not across the whole division," Burch says.

"Information management has been resilient, as expected. Growth and development of data and document storage has offset reductions in revenue from lower waste paper prices, indicating potential for a nice uplift once paper prices normalise," he says.

While Freightways will benefit from an improving economy, management isn't expecting a rapid or steep improvement.

Burch says he is unlikely to change his forecasts significantly apart from a few tweaks but the bias is likely to be slightly downward. "The result and commentary suggest (the) full-year may come in at the lower end of the analyst range."

Both his forecast and consensus forecasts imply a lift in the second half but that view "is perhaps dampened a little by the outlook commentary," he says.


ASB Securities Investment rating: marketperform.


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