Freightways posts improved numbers, 'gradual improvement' ahead

UPDATED 11.50am: Forsyth Barr research manager Rob Mercer has given Freightways (FRE) a big thumbs up and "buy" recommendation on the back of today's results.

Mr Mercer's recommendation is based on renegotiated borrowing terms and the potential for big profit growth.

"FRE funding costs have been very high (>9%) and therefore we were pleased to see that it had renegotiated its banking facilities that will lower funding costs by around -1.1%," Mr Mercer said.

"Earnings have been negatively impacted by the recessionary conditions, but have still proven to be relatively defensive. FRE has managed its business to both protect core earnings and position itself for growth as it expands its Information Management business methodically, but carefully, into Australia. We believe FRE’s can deliver double-digit profit growth over the next few years," he said.

Freightways (FRE) has posted improved revenue and ebita numbers and has flagged further “gradual improvement” in the wider economy to underpin future growth.

In an announcement to the NZX posted this morning, Freightways managing director Dean Bracewell and chairwoman Susan Sheldon said consolidated operating revenue was reported at $353 million in the year to June, up 7% on the year prior.

These figures beat analyst estimates according to Capital IQ.

The strongest revenue growth occurred in the information management division, up 15%, while the larger express package and business mail division posted a 5% increase.

Full-year ebita was $66 million, up 4% on the earlier period.

Losses from the Christchurch earthquakes were recorded at $1.3 million.

A fully-imputed dividend of 7.25 cents per share was announced, to be paid on September 30.

Of the future the announcement says: “Based on our experiences in 2011, we expect to see our market segments continue to gradually improve throughout 2012 … Subject to business factors its control, Freightways is well positioned to reap the benefits of further improvements in the markets in which it operates.”

Mr Bracewell says the results demonstrated “the overall resilience shown from Freightways despite the challenges of nature and the economy.”

The announcements also flagged banking facilities totalling $NZD110 million and $A70 million had been renegotiated. The revised facilities are now spread equally between three, four and five-year maturities.