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Mainfreight's first half profit drop by 4.6 percent; dividend unchanged

Tuesday 13th November 2012

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Mainfreight, the global transport and logistics group, posted a 4.6 percent drop in first-half profit as an earnings slump in Europe offset gains in all of its other markets. It kept the first-half dividend payment unchanged.

Profit was $27.7 million, or 27.9 cents a share, in the six months ended Sept. 30, from $29.1 million, or 29.45 cents, a year earlier, the Auckland-based company said in a statement. Sales climbed 4.9 percent to $936 million.

Earnings before interest, tax, depreciation and amortisation in Europe tumbled 50.4 percent to 5.26 million euros as margins shrank in the face of "poor warehouse utilisation and activity, and poorly performing transport operations in Belgium and France."

"We maintain our confidence in the long-term benefits of our European acquisition although we are disappointed with the financial performance over the last six months," managing director Don Braid said in a statement.

Mainfreight acquired Netherlands-based Wim Bosman Group for 110 million euros plus earn outs last year to secure its foothold in Europe. Sales from the region fell just 1.4 percent to 122.4 million euros while costs including labour increased.

By contrast in its biggest market of New Zealand, ebitda climbed 8.7 percent to $24 million in the first half as sales rose 5.9 percent to $228 million. Australian earnings gained 22 percent to A$13 million on sales growth of 13.3 percent to A$209 million.

In Asia, ebitda rose 19.2 percent to US$1.37 million though in-country sales fell 4.2 percent and European trade "remains weak."

US earnings rose 18.7 percent to US$8.12 million as sales gained 10 percent to $182 million, mainly reflecting a better performance from its Mainfreight USA business. Its Carotrans business lifted sales by 3.6 percent to about US$69 million, with ebitda little changed from a year earlier.

The company will pay a first-half dividend of 12 cents a share on Dec. 14, unchanged from a year ago.

"We are confident of maintaining this growth and profitability, and expect to see improving returns from our European interests," Braid said.

The shares last traded at $10.40 and have gained 5.7 percent this year. The stock is rated 'outperform' based on six recommendations compiled by Reuters, with a price target of $10.67.

BusinessDesk.co.nz

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