Mainfreight shares gain after update

WELLINGTON: Mainfreight shares hit an alltime high of $46.95 in early trading following a strong trading update and upbeat annual meeting on Thursday.

Shares of the global logistics firm gained 7% when the market opened yesterday morning, and are up 10.5% so far this year, valuing the business at $4.27 billion.

Mainfreight said it had turned around slowing progress in Australia, the division having lifted pretax profit 167% to $A17.9 million ($NZ19.27 million) in the 17 weeks ended July 26, on a 13% increase in revenue to $A287.9 million. The strong result boosted overall profit before tax 20% for the period.

Group managing director Don Braid told about 150 shareholders at Thursday’s meeting the New Zealand unit was expected to deliver secondhalf earnings in line with the same period last year.

Analysts at Jarden said the result was ‘‘remarkable’’ and upgraded their forecast for net profit in the March 2021 year by 25%, due to increasing revenue in Australia and New Zealand.

That was offset by updated foreign exchange assumptions leading to modest downgrades in expected revenue from the Americas and Asia. Jarden increased its target price on the stock to $45 from $37.50.

Shareholders welcomed the trading update with applause, but quietened down when Mr Braid confronted growing complaints over the firm’s governance.

Mr Braid hit back at criticisms this week by the NZ Shareholders’ Association, which spoke out against the reelection of one of the firm’s directors.

The NZSA said while members should make up their own mind, it would vote undirected proxies against the reelection of director Bryan Mogridge, citing disappointment with his other directorships at Rakon and Pyne Gould Corp.

‘‘It is past the time for Mr Mogridge to move on. Surely there is fresh talent who can offer the company more,’’ said the association, which had also moved against Mr Mogridge when he last came up for reelection in 2017.

It was the only sore point in an otherwise upbeat presentation from Mr Braid.

‘‘There’s so much criticism of our governance, we cannot put up with it any longer. We are proud of the way we run this business — it is different from a lot of others,’’ he said.

The firm’s management was ‘‘not pixie dust; it doesn’t just get waved around by whoever sits at the table. It is worked on hard every day.’’

After the meeting, Mr Braid told BusinessDesk it was ‘‘not a board of bloody old mates’’.

‘‘The advice to their members was personal. It referred to Bryan’s previous directorships — well that’s got nothing to do with the Mainfreight experience,’’ he said of NZSA’s letter.

‘‘The thing that makes us different is our culture and the way we do things,’’ he said.

‘‘We need tenure across the table because we promote from within and what would happen to management if we were changing the board every five years?’’

Mr Mogridge was reelected with 79.5% voting in favour. — BusinessDesk

❛ Surely there is fresh talent who can offer the company more