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Mainfreight lifts nine-month surplus 27%

Thursday 10th February 2011

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Mainfreight reported a 27.1% rise in its net surplus before abnormals to $34.6 million for the nine months to December, as third quarter trading maintained improvements seen during the first half.

Revenue rose 20.1% from a year earlier to $1.01 billion, with offshore sales continuing to account for 70% of the total, Mainfreight said today.

Trading through the third quarter maintained improvements seen in the first half. Early fourth quarter trading had been difficult to measure, but the company said it remained confident the improvements and levels of trading would continue through to year end.

A much improved year end result was expected before abnormals, which would include the non-recurring, non-cash deferred tax expense triggered by government legislation.

The result included a bonus accrual of $7.8 million which was excluded in last year's comparative figures due to a suspension of bonus payments.

In the New Zealand domestic division earnings before interest, tax, depreciation and amortisation (ebitda) rose 7.3% to $30.7 million, including bonus accruals.

Sales were up 8.7% to $219.5 million, with freight volumes leading into Christmas relatively strong, consistent with past years. Market share increases helped growth, the company said.

Logistics volumes were weaker as stock holdings from customers were limited to "just in time" levels. Transport volumes remained satisfactory during January and into February.

In the New Zealand international division ebitda rose 13.8% to $3.9 million, with revenue up 16.6% to $91.2 million.

Volumes for both export and import were satisfactory through into December, while export volumes had strengthened ahead of imports in January and February, Mainfreight said.

In the Australian domestic division, ebitda for the nine month period rose 11.8% from a year earlier to $13.2 million, with sales up 17.4% to $169.4 million.

Australian freight volumes were satisfactory through the third quarter and had remained consistent into January and February.

While climatic conditions had short term effects on freight movement, particularly in Queensland, it was expected volumes would increase into that region as repairs and stock replacement got under way, Mainfreight said.

The Australia international division had a 0.4% decline in ebitda to $5.9 million, with sales up 24.3% to $186.3 million.

Gross margins remained under pressure as international freight rates continued to fluctuate through supply and demand activity particularly in the import trade. Margin management remained a key area for improvement.

In the US, trading conditions continued to improve for both the company's operations, and while they were still far from satisfactory, Mainfreight remained confident of its long term objectives in the market.

Total sales for the US operations was up 27.4% to $316.2 million, with ebitda up 93.2% to $10.6 million.

In Asia, continuing growth within the region helped the company lift revenue 47.6% to $29.4 million, while ebitda rose 72.5% to $2.7 million.

Asia export volumes remain strong, in particular with market increases in airfreight, Mainfreight said.

Progress continued on the company's European and South American expansion plans.



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