- 22 February 2007
Financial Result for the Nine Months Ended December 2006 (Unaudited)
The Mainfreight Group is pleased to report a net profit after taxation and before abnormals of $25.77 million for the first nine months of the 2007 financial year. This represents a $5.50 million or 27% increase when compared to the same period last year.
A further $17.56 million of abnormal gains is added to our net surplus as previously disclosed in the half year result, bringing total net surplus for the period to $43.33 million.
Consolidated revenues (sales) increased year on year to $740.97 million. Excluding foreign currency conversions to New Zealand dollars this is an increase of 4%.
Whilst our year-to-date net profit improvement of 27% is satisfactory overall, New Zealand’s performance during the third quarter was below our expectations, particularly during December.
Earnings from our offshore interests continue to gain momentum and perform very satisfactorily. The offshore contributions continue to provide half our total EBIT.
Overall performance in January and early February is in line with the same period last year.
Divisional Performance
New Zealand Domestic
Revenue and EBIT performance are in line with the same quarter of the previous year. Year-to-date revenues have improved by 1% to $206.27 million and EBIT improved 6% to $18.69 million.
One-off costs of $0.28 million were incurred during the quarter together with higher operating costs in our new Auckland facility.
Trading in the new year compares to last year.
New Zealand International
Revenues year to date declined 0.5% to $114.82 million with foreign currency conversions and fluctuating ocean freight rates contributing to flat sales.
Meanwhile EBIT continued to improve to $2.58 million (an increase of 21%) reflecting the synergies of merging Mainfreight International and Owens International, combined with a focus during the quarter on inbound freight margins. Improved EBIT performance is expected to continue.
Australian Domestic
Revenues increased 14% to $97.51 million, and EBIT has also continued to improve, up 141% to $7.89 million excluding abnormals year to date.
Trading continues to be strong with the new year well ahead of the previous year.
Australia International
Revenues were maintained at last year’s levels and EBIT increased 18% to $9.30 million despite a not unexpected declining performance in the Projects division of Pan Orient.
Trading remains very positive and will continue its momentum through 2007.
USA International
Our strong revenue growth continues in this division with year-to-date revenues improving 21%, excluding foreign currency exchange, to $87.64 million. EBIT year to date is improved 77% to $3.89 million.
Third quarter performance was in line with last year’s as a result of increased costs incurred in the opening of two new branches in Boston and San Francisco.
Margins were slightly affected as FCL inbound Asian volumes (traditionally lower margin trade lanes) were increased. The Company expects margins to improve as volumes increase and rates are further negotiated.
Trading continues its improvement in the new year.
Associates
Our share of earnings from our Asian associates increased by 36% to $0.93 million.
Group Operating Cash Flows
Operating cash flows were $29.76 million compared to $29.27 million last year. Increased debtor balances contributed to this performance. An increased focus on cash collection is currently in place and year end balances are expected to be much improved.
Capital expenditure was $28.54 million with $23.09 million spent on property development.
During the quarter a special dividend of $27.04 million was paid to shareholders.
Acquisition Activity
Our active search and review of potential opportunities continues across all divisions and countries.
Summary
Year-to-date performance remains satisfactory across all divisions. However the New Zealand economy has not provided the growth expected for our New Zealand businesses. The ongoing strength of our offshore interests continues to fuel our desire for greater offshore growth, further reducing our reliance on the New Zealand operations.
We continue to expect our year-end financial performance to be much improved on the previous year.
For further information, please contact:
Don Braid
Group Managing Director