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Long haul for ambitious Mainfreight

Friday 31st January 2003

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At $1.13 Mainfreight's shares haven't shifted much since they were floated in 1996 at 96c but the company seems to have a loyal and patient shareholder following.

Mainfreight is nothing if not ambitious and its early expansion took it to the US, Asia and Australia. Its acquisitions were usually loss-makers at the time they were bought but the US and the Australian international division are now returning steady profits.

Annual revenue expanded from $77 million in the year before listing to a peak of $411 million in 2001 before slipping to $401 million last year. Managing director Don Braid talks of $1 billion by 2006.

The tricky bit has proved to be the Australian domestic operation, which the company bought as K&S Express in 1999 for $12 million.

Mainfreight was confident it could turn around profitability as it had with its other buys but so far it hasn't succeeded. While the Australian arm overall made a pre-tax profit in the September half-year, domestic was still losing money.

The company has responded by dumping unprofitable customers and cutting costs but the market is unlikely to warm to the shares again until it shows it can make money across the ditch.

In the meantime the New Zealand operations are benefiting from the strong domestic economy but transport companies everywhere face the threat of higher fuel prices if the US attacks Iraq.

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

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