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Freightways keeps finance costs in check


A combination of good timing and astute treasury management has paid off nicely for Freightways, helping it keep interest costs steady while driving growth in its information management segment.

Duncan Bridgeman
Mon, 13 Feb 2012

A combination of good timing and astute treasury management has paid off nicely for Freightways, helping it keep interest costs steady while driving growth in its information management segment.

Freightways today posted a 20% rise in net profit to $18.97 million on revenue of $192 million, up 9%. Adjusted for one off insurance gains the profit was $18.3 million.

Freightways has been in expansion mode as it looks to grow its information management division, which offers data storage for businesses.

Last October the company paid $10 million for Iron Mountain's New Zealand operations to go with its purchase of the business and assets of Filesaver in Sydney.

The acquisitions, funded by bank debt, increased Freightway’s interest bearing debt to $178 million from $160.7 million as at December 2010.

In September the company renegotiated its finance facilities with its three existing banks, with a maturity spread evenly across three, four and five year tranches.

Moreover, the company was able to negotiate much lower pricing, knocking 110 points off the margin, while keeping its existing banking covenants in place.

The result being that while bank borrowing increased by $18.7 million, interest costs remained steady at $6.9 million.

Chief financial officer Mark Royle said the lower pricing represented between $1.5 million and $2 million in savings.

It was a combination of timing and recognising an opportunity to refinance when banks were eager to write new business, he said.

Meanwhile, Freightways’ core courier business continued to truck along nicely, following a strong first quarter helped by the Rugby World Cup.

Chief executive Dean Bracewell said a particularly strong first quarter was followed by strong performance in the second quarter, with increased volume from many existing customers and price increases underpinning the revenue boost.

Mr Bracewell said while business activity was mixed, the company expected to see continued gradual improvement in the market segments it operates in.

Freightways will pay a first-half dividend of 8.5 cents a share, up from 7.25 cents a year earlier. 

Duncan Bridgeman
Mon, 13 Feb 2012
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Freightways keeps finance costs in check
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