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Freightways posts 14% drop in first-half profit, sees

Monday 15th February 2010

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Freightways, the owner of courier brands including New Zealand Couriers, Post Haste and SUB60, posted a 14% decline in first-half earnings and said it expects a gradual pick-up as the domestic economy improves.

Net income fell to $14.5 million, or 9.5 cents a share in the six months ended December 31, from $16.9 million, or 13.1 cents a year earlier, the company said in a statement today. It will pay a first-half dividend of 7 cents a share, down from 8 cents a year earlier.

“External factors suggest the domestic economy is showing signs of improvement and some positive signs have emerged in some areas of the Freightways group of businesses,” the company said. Still, Freightways has yet to see “a sustained, across-the-board improvement, which indicates to us continuing market volatility and suggests the impact on Freightways of an improving economy will be gradual.”

Shares of Freightways declined 3.4% to $3.10 after the results, which showed profit fell more than the 3% forecast by Forsyth Barr analyst Rob Mercer. The company said volumes of express packages from existing customers, which contribute the majority of revenue and earnings, fell. It focused on service quality and cost control to limit the effects of the downturn. It didn’t give a forecast for the full-year, saying only that it is well positioned for any pickup in demand.

The margin on express packaging slipped to 17% from 18% while on information management services it weakened to 17% from 19%. It trimmed transport expenses by 7% to $75 million.

Operating revenue declined 7% to $164.9 million.

Freightways said it has lodged a complaint about New Zealand Post with the Commerce Commission and asked the government to facilitate the appointment of an independent regulator to take control of the postal industry. A recent attempt by NZ Post “to radically change access arrangements for independent postal operators, including DX Mail, is viewed by Freightways as an attempt to simply thwart competition,” it said.

The company’s results strip out five extra trading days in the year-earlier period.  Freightways said.


View the Freightways NZX announcement >>

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