Mainfreight has seen its annual revenue drop and profit remain flat, but the company claims the outlook for the freight industry is getting a little better every month.
The company reported a net surplus after taxation and abnormals of $36.37 million for the year ending March, up 2.5% on the previous year’s result.
The slight rise in profit came despite a 10.5% drop in revenue from $1.26 billion to $1.13 billion, while ebitda was down 6.7% to $75.85 million.
Mainfreight described the past 12 months as an “exciting and challenging time”, with freight volumes deteriorating in most of its business units.
It said it had responded to this decline by better management of its cost structures, improved margins, an aggressive expansion of its market share through increased sales activities and by continuing to improve its quality and levels of service.
Mainfreight said the momentum created by these moves had provided improved results month by month and that this had continued into our new financial year.
It said freight volumes and revenues were “much improved” on the same period in the year prior, with the top 300 customers in its New Zealand domestic business trading 8% ahead in the first six weeks of April/May compared to the same period last year.
While conceding that seasonality played a part in the second half result, the company pointed out that revenue improved by 11.2%, with ebitda up by 58.4% when comparing second half performance to that of the first half.
It has also extended its international operations, with offshore sales revenue now accounting for two-thirds of the company’s total revenue and likely to increase over the next few years.
However, it said there were still “difficulties and challenges” in the newly acquired North American operations of Mainfreight USA, and the freight company has yet to find “acceptable levels of growth” in its Asian operations.
Revenue in the US was down 24.1% to $336.98 million, with ebitda dropping sharply by 59.3% to $7.27 million, although there were improvements in the second half.
In its Asian operations, revenue improved by 8% to $27.88 million, although intense competition in a difficult market saw ebitda fall by 21.4% to $2.06 million as margins were compromised.
Australia remained a bright spot in the company’s global operations, with improved profits despite declining freight volumes. Sales revenue across the Tasman was maintained at $392.33 million, while ebitda was up 56.9% to $22.46 million.
Closer to home, revenues for the New Zealand group operations were down 7% to $375 million, with ebitda 5.1% lower at $44.07 million.
The government’s decision to assist KiwiRail with increased funding was welcomed by the company, which said it was overdue, with port reform also needing to be addressed.
Mainfreight has entered into agreement with KiwiRail for leased land in downtown Wellington and Palmerston North and construction is due to begin mid-year.
The company has declared a final dividend of 10cps, bringing the full dividend for the year to 18.5cps.
It said the ongoing increase in sales had instilled confidence, but the business was well aware of the “continuing fragility” in many economies of the world and was focused on maintaining its disciplines and cost initiatives of the past year.
“Regardless of the economic by-play, we continue to explore the many opportunities that the world’s supply chain logistics market and customers provide us, not only in the countries where we currently reside, but also in those we have yet to reach.”
Thu, 27 May 2010