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Freightways first-half sales rise 7%, profit dips on year-earlier one-time gain

Monday 19th February 2018

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Freightways reported a gain in first-half revenue although profit fell on the impact of a year-earlier one-time gain and a narrower earnings margin at its express package and business mail division.

Profit fell to $31.4 million in the six months ended Dec. 31 from $34 million a year earlier when Freightways recognised a $4.5 million one-time gain, the Auckland-based company said in a statement. Sales rose 7.1 percent to $292 million.

Freightways has steadily increased sales and earnings in each of the past seven years and the company said today the markets it operates in "remain positive", supporting year-on-year earnings growth for 2018. It is the first earnings report delivered by Mark Troughear, who replaced long-serving Dean Bracewell from Jan. 1.

Earnings before interest, tax, depreciation and amortisation at express package and business mail (EP&BM) rose 6.8 percent to $39.8 million in the first half as revenue grew 7 percent to $217 million. The ebitda margin shrank to 16.8 percent from 17.2 percent.

Information management (IM) sales climbed 7.3 percent to $76.3 million and ebitda rose 9.6 percent to $17.3 million, as its ebitda margin widened to 19.1 percent from 18.8 percent. The smaller IM business makes up 26 percent of revenue but 29 percent of ebitda.

The results include Australian State Waste Services and its related entities, a group that provides medical waste services in Sydney and surrounding regional areas, for an initial payment of A$6 million. The acquisition, which was effective on Sept. 1, includes a potential maximum earn-out payment of A$4 million, measured as at June 30, 2021.

The company didn't give a breakdown of the Medical Waste contribution although it was expected to immediately boost earnings. Total assets rose by $28 million in the first half, including $9 million of intangible assets from the waste business. Its gearing ratio was little changed at about 40 percent.

It will pay a first-half dividend of 14.5 cents a share on April 3, with a record date of March 16, up from 13 cents a year earlier. The payment is tax-paid.

Freightways shares fell 0.3 percent to $7.51 and have dropped 8.5 percent in the past 12 months while the S&P/NZX 50 Index rose 14 percent.


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