US, Asia drag down Mainfreight profit

THE performances of Mainfreight’s divisions in the US and Asia dragged down profit for its firsthalf trading, in spite of strong trading in Australia and improved European results.

Sales revenue grew 7% on a year ago from $1.14 billion to $1.22 billion, earnings before interest, tax, depreciation (ebitda) rose 3% to $88.3 million while reported aftertax profit grew 1%, to $41.8 million.

Forsyth Barr broker Damian Foster said the 1% gain in aftertax profit compared to fullyear market consensus forecasts of about 14% growth.

The weakerthanexpected firsthalf result was mainly from weaker performance in the Americas, with a 10% revenue decline, Asian ebitda was down 53% and there were weaker margins in New Zealand, with ebitda up 3.5% on revenue growth of more than 10%.

‘‘Australian operations performed strongly and were the clear standout,’’ Mr Foster said.

Mainfreight shares were down 2.3% at $23.55 following the announcement.

Mr Foster said while Mainfreight was a growth business, that growth was often lumpy and the likely broker downgrades which stem from this result, probably around 3%4%, would have some share price consequences, given Mainfreight’s premium valuation rating.

‘‘The company doesn’t provide guidance but does reference a strong start to the second half, while also outlining in its result presentation a number of factors that inhibited the firsthalf result,’’ he said.

In New Zealand, revenue rose 10% to $317 million and ebitda gained 3.5% to $38 million, BusinessDesk reported.

Its domestic operations faced additional costs following the Kaikoura earthquakes last November.

Against that, Mainfreight said it enjoyed ‘‘stronger intraisland volumes, together with an expanded and improving logistics warehousing operation.’’

Australian sales rose about 14% to $A292.9 million ($NZ304.6 million) and ebitda jumped 29% to $A20.8 million on the back of ‘‘strong sales improvement across its domestic and warehousing divisions, Mainfreight said.

‘‘Both domestic transport volumes and logistics warehousing activity continue to increase as the preChristmas season influences October and November trading,’’ it said.

Air and ocean activity remained subdued compared with the prior period, Mainfreight said.

Mainfreight’s Asian operations recorded a 20% jump in sales to $US37.6 million ($NZ52.6 million) but ebitda tumbled 53% to $US2 million in the first half, as gross margins were adversely affected by the decline in intercompany airfreight revenue.

In Europe, sales rose 19% to ¤163 million ($NZ279 million and earnings gained 9.8% to ¤8.4 million, BusinessDesk reported.