Freightways first-quarter profit rises 6.4%

It is on track for annual earnings growth.

Freightways said sales and profit rose in its first quarter, putting the courier and information management company on track for annual earnings growth.

Net profit was $15.1 million excluding certain items in the three months ended Sept. 30 from $14.1 million a year earlier, the Auckland-based company said in a statement. Operating revenue rose 7 percent to $143 million.

The market update was provided to shareholders at their annual meeting today, the last at which Dean Bracewell will attend as managing director, having announced last month that he would step down after 18 years in the role and 34 years with the company. The stock fell 0.3 percent to $7.58 today, having gained 374 percent since the company's initial public offering in 2003 at $1.60 a share.

Bracewell marked the occasion by saying he had enjoyed "a wonderful career with this great company" and chair Sue Sheldon praised his long and successful tenure and "very substantive contribution". But most of Bracewell's address to shareholders was delivered in typical no-nonsense style.

"The markets in which Freightways operates in both New Zealand and Australia remain positive," Bracewell said. "The increased volume and activity, compared to the prior comparative period, that is evident in this trading update has provided a sound start to the 2018 financial year. Accordingly, Freightways continues to target year-on-year earnings growth."

That would mean an increase on 2017's $60.9 million profit, which was up 22 percent from a year earlier.

"Strategic growth opportunities, including acquisitions and alliances that complement existing capabilities, will be executed where they make commercial sense," Bracewell said.

In August, Freightways expanded its reach into waste management with the acquisition of Australian State Waste Services and its related entities, a group that provides medical waste services in Sydney and surrounding regional areas.

Operating revenue at its biggest division, express package & business mail, rose 7.3 percent to $105 million in the first quarter and earnings before interest, tax and amortisation (ebita) rose 5 percent to $18.2 million. Its ebita margin slipped to 15.7 percent from 16.5 percent a year earlier. Operating costs included invest in additional airfreight capacity and premises and one-time costs to relocate four Christchurch businesses onto one site, the company said.

Information management operating revenue rose 6.8 percent to $38.4 million and ebita climbed 17 percent to $7.9 million. Its ebita margin rose to 20.6 percent from 18.9 percent. The earnings figures for information management exclude a net $542,000 of gains in the quarter.

"This first quarter result represents a sound start to the financial year, the highlights being; the strong revenue growth in the express package & business mail division, the completion of our transition to new premises in Christchurch and the stepped earnings improvement in the information management division," the company said.

Mark Troughear, a 21-year company veteran, is to take up the role of chief executive on Jan. 1, 2018.


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