US, Asia drag down Main­freight profit

Otago Daily Times - - BUSINESS & MONEY - SI­MON HART­LEY si­mon.hart­ley@odt.co.nz

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.

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