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Freightways lifts September quarter profit by 14 percent

Thursday 25th October 2012

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Oct. 25 (BusinessDesk) - Freightways, the courier and data management group, said profit rose 14 percent in the quarter ended Sept. 30 in what it expects to be an ongoing "slow-growth environment."

Profit was $9.2 million in the three months ended Sept. 30, from $8 million a year earlier, the Auckland-based company said in a statement. Sales gained 8 percent to $100.9 million.

Managing director Don Braid said the results show the success of its strategy to diversify geographically and by industry, including data management assets, which allowed it to endure the ups and downs of the economic cycle.

"We expect to be operating in a slow growth environment for the foreseeable future," Braid said. "We are however mindful that any further deterioration in the global economy will inevitably influence the markets that we operate in."

The company's express package and business mail division lifted sales by 4 percent to $76 million and earnings before interest, tax, depreciation and amortisation by 5 percent to $13 million. Freightways said it made "modest price increases across the entire division" to help make up for cost increases.

Information management sales rose 23 percent to $25 million and ebitda jumped 36 percent to $6 million, which it said reflected a strong performance for its document and data storage operations, offset by "significantly lower prices" for sales of paper in the document destruction business.

Bank funding costs fell in the latest quarter, reflecting the renegotiation of its facilities in September last year.

Freightways said its recently acquired Iron Mountain NZ, Filesaver and DataPrint are performing to expectations.

Looking ahead, express package volumes are expected to "remain sound" while letter volumes through DX Mail will "remain under pressure."

It said the company is dependent on NZ Post, as the owner and operator of New Zealand's wholesale postal delivery network, for access to parts of its mail service and "has challenged the pricing model of our access for some time."

"It is expected that the future terms of access to the NZ Post network, for those letters that we don't deliver ourselves, will be resolved in the near future," Freightways said. "This will enable increased certainty for the growth and development of this business."

Information management is expected to deliver "good year-on-year earnings growth" despite lower paper prices and increased costs, it said.

The shares rose 0.9 percent to $4.45 and have climbed 20 percent this year.

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