Daily ShareChat: Mainfreight

Sunday 13th June 2010

Mainfreight's annual results showed a marked improvement in the second half and trading conditions continued to improve in the three months ended March and in the following six to eight weeks, says ASB Securities analyst David Boyce.

The fourth quarter revenue of $289.9 million, up 6.3% on the previous fourth quarter, was 10.2% ahead of his forecast, Boyce says.

"However, fourth quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of $19 million was down 13.4% on the fourth quarter of 2009 and 16.1% below our forecasts, mostly due to the $3 million (staff) bonus accrual that we had not included in our forecasts."

Mainfreight had reversed $6.5 million of bonus accruals in the fourth quarter of 2009, making comparisons difficult.

The result showed the company's US operations are still struggling "but it is apparent that business is undergoing substantial structural changes to turn things around," Boyce says.

"While we believe this effort will be fruitful, we have pushed out our timing of reaching EBITDA breakeven to 2012."

The company plans investments including building freight facilities on land leased from KiwiRail in Wellington and Palmerston North and a new super-site outside Melbourne. It will also open three new branches in China.

Mainfreight's management commentary on the outlook is gaining confidence, he says.

Investment rating: marketperform.

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