Strong revenue gains push Mainfreight to record fullyear profit result

GLOBAL logistics company Mainfreight has posted an 8.7% profit increase to its fullyear result to a record $112.2 million, on the back of strong revenue gains in New Zealand and Australia.

Mainfreight’s discretionary bonus to staff rose 7.4% to a total of $20.7 million.

For its year to March, sales revenue improved 12.2% to $2.62 billion; including 1.6% of foreign exchange gains. Earn ings before interest, tax, depreciation and amortisation (Ebitda) rose 9% to $215.4 million and aftertax profit was up 8.7% to $112.2 million.

Company debt declined by $16 million to $196.8 million, with the debt gearing ratio down from 24.8% to 21.7%.

The final 26c per share dividend took the full year to 45c.

Mainfreight shares, up more than 15% on a year ago, were flat at $25.71, following the announcement.

Craigs Investment Partners

broker Peter McIntyre said it was a ‘‘good’’ result and slightly ahead of expectations.

‘‘Encouragingly, the US business showed some secondhalf growth after a weak first half, with Mainfreight citing a betterthanexpected turnaround from CaroTrans and improved domestic transport contribution.’’

Offsetting that growth were ‘‘slightly weaker than expected’’ contributions from Europe and Australia, albeit both those divisions had solid secondhalf revenue growth, he said.

There was $4.3 million in abnormal items for the year, incorporating redundancies in Asia, Europe and the US, plus a onethird writedown in the brand value of European business Wim Bosman.

Mainfreight managing director Don Braid said the record result was a fitting tribute to the company celebrating its 40th year.

‘‘The decision we have taken through the year to invest considerably in the intensification of our network, and to develop facilities and infrastructure to cope with ongoing growth aspirations, are significant,’’ Mr Braid said in a statement.

Mr McIntyre noted Mainfreight had committed to 38 land and building projects across its network, which meant its property capital expenditure was ‘‘likely to remain elevated for several years’’.

Mr Braid said investments in infrastructure, and the $20.7 mil lion in bonuses, were not without risk, and associated increases in overhead costs.

Mr McIntyre said while there was no specific earnings guidance for 2019, Mainfreight had a positive outlook statement, highlighting its confidence in further network investment.

It also expected positive revenue and Ebitda growth from all regions in the short term.

‘‘A subdued outlook for the Europe business appears to be the only weak point,’’ Mr McIntyre said.