Freightways beats estimates with 24% full-year profit gain

BUSINESSDESK: Freightways, the courier and data management group, posted a 24 percent gain in full-year profit, beating estimates, and forecast further growth in 2013 other than for its document destruction business.

Profit rose to $37 million in the year ended June 30, from $29.9 million a year earlier, the Auckland-based company says. Sales rose 8% to $382 million.

The latest year was marked by a series of acquisitions that deepened Freightways' investment in data management, including the $13 million purchase of Iron Mountain New Zealand in October last year and the $8.1 million (including earn-outs) buyout of Filesaver in December.

It acquired Australian document storage firm Metrofile in February for $900,000.

That helped make data management the fastest-growing part of Freightways’ business, with sales climbing 21% to $92 million and earnings before interest, tax, depreciation and amortisation gaining 18% to $21 million.

“As has occurred in 2012, we expect the Information Management division to deliver sound overall year-on-year earnings growth” despite costs to expand capacity and the impact of lower paper prices sold by its document destruction operations, the company says.

The Express Package & Business Mail division, which accounts for about 75% of revenue and earnings, lifted sales by 5% to $292 million while ebitda gained 7%to $53 million.

The division will achieve further growth in 2013 provided that “growth amongst our existing customer base is sustained”, the company says.

The company got a one-time ebita gain of $1.5 million in the latest year from earthquake-related insurance claims, having received a gain of $1.3 million in the previous year.

Shares of Freightways fell 0.8% to $3.87 on the NZX today and have gained 7.3% this year.

The stock is rated a "hold" based on the consensus of seven recommendations compiled by Reuters, with a price target of $3.95. Profit in 2012 exceeded the market consensus of $35.7 million.

Freightways will pay a final dividend of 9.5 cents a share, making 18 cents for the year, up from 14.5 cents in the previous year.

The final dividend will be paid on October 1 to investors on the register as of September 14.