Monday 18th August 2025 |
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First and foremost, we remain deeply saddened by the sudden and tragic loss of a member of the Shred-X team in Victoria, Australia in December 2024. Our thoughts and sympathies are with the individual’s family, friends, and colleagues. We are cooperating fully with WorkSafe and the police in their investigations, and we are undertaking a thorough review of our internal safety systems.
Building strength for the journey ahead
Following another year shaped by a constrained economic environment, Freightways delivered a solid performance. This outcome reflects the ongoing focus of our people to foster strong customer relationships and deliver consistently superior service across our network.
Business Performance
Freightways’ FY25 performance was better than macroeconomic indicators would suggest. While New Zealand’s GDP contracted by 0.6% over the year to March 2025, our total revenue increased by 6.6% year-on-year. Over the full year EBITA and NPAT also rose by 6.3% and 12.9%, respectively. Our lower debt level reduced interest costs and contributed to improved profitability.
The EPBM division achieved revenue growth of 6.2%, EBITA growth of 11.6%, and margin improvement of 60bps over the prior corresponding period. Although volumes were lower from our existing customers, this was offset by winning business from new customers.
The Information Management and Waste Renewal (IMWR) division had a mixed performance, with revenue up 9% but EBITA down by 3.1%, driven mainly by the performance of the Waste Renewal business in FY25. We expect that we will improve this performance over the coming year with a range of cost and price optimisation initiatives.
Across the group, despite sector wide declines, Freightways increased market share and maintained pricing that reflected our increases in costs, including wage increases for all of our staff. We have also positioned our brands as either #1 or a fast growing #2 in each niche in which we compete.
Labour and Cost Management
Over the two years post-Covid, we experienced significant labour cost increases. As an example, truck driver wages rose by approximately 20%, minimum wage increases peaked at 25% over a 4-year period in NZ, and paid sick leave doubled. Our strategy over FY25 and FY26 is to reclaim this lost margin through efficiency gains and pricing adjustments.
Recruitment conditions have improved. We’re now seeing strong interest from prospective employees, including in roles that were previously difficult to fill.
Dividends and Capital Management
The Directors have declared a final dividend of 21cps, making the total dividend for the year 40cps, fully imputed at the New Zealand company tax rate of 28%. This is an increase of more than 8% since last year. The dividend will be paid on 1 October 2025, with a record date of 12 September 2025. This payout equates to approximately $37.5 million.
We remain focused on disciplined financial management. Margin improvements are expected to continue through efficiency and pricing discipline, and in FY26 we expect some same customer growth across most of our operations.
Strategy and Operational Resilience
Freightways continues to diversify across geographies and service lines. Over a third of our revenue and profits now come from Australia. The 2022 acquisition of Allied Express marked a major step into that market, with further investment planned.
The Group’s four activities offer Freightways a diversified logistics portfolio which balances risk and opportunity. While some activities are more sensitive to the economic cycle, others provide reliable, recurring revenue streams.
Several businesses lead or outperform their respective markets. Local management teams are empowered to act with autonomy, which supports responsiveness and innovation.
Recent examples include:
• TIMG’s digital medical records partnership with InfoMedix
• Allied Express’s investment in automated sortation, improving throughput to meet a 12% lift in demand
• Kiwi Oversize is growing a new revenue stream to $10m per annum, over 2 years, with minimal capital investment.
Systems and Technology
Project Evolve is underway to upgrade our billing and payments infrastructure. Phase one will offer customers more flexible payment options. Phase two will introduce automated pricing and remuneration systems linked to item weight, size, and destination. Given the scale of our operations (processing over 100 million items per year), these changes are expected to improve margin.
Outlook
In the near term, we are focused on margin improvement while maintaining and improving service quality. Our Horizon one and two revenue streams are well established as either market leaders or fast-growing challengers. These businesses will benefit from a modest level of same customer organic growth and we expect will continue to win market share from strong service propositions.
Over the longer term, growth will come from emerging areas such as oversized freight, chilled deliveries, high-value waste services, and third-party logistics for eCommerce.
Freightways has demonstrated resilience through recent years of disruption. Our focus remains on operational efficiency, prudent capital management, and delivering value to customers, employees, and shareholders.
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