- 13 March 2009
Financial result for the nine months ended December 2008 (Unaudited)
The Mainfreight Group is pleased to report a net profit after taxation and before non-recurring items of $29.5 million for the first nine months of the 2009 financial year. This represents a $0.1 million or 0.4% increase when compared to the same period last year.
Consolidated sales revenues for the period were $992.8 million compared to $645.4 million last year, an increase of 53.8%. Excluding foreign exchange adjustments, the increase is 45.1%. For the December quarter sales were $367.8 million compared to $262.0 million in the same quarter last year.
EBITDA performance improved to $59.3 million from the prior year's result of $52.7 million, an increase of 12.5%. Excluding foreign exchange adjustments, the increase is 8.1%. EBITDA for the December quarter was at the same level as last year.
The average currency exchange rates utilised in this result are 68 cents US and 82 cents Australian.
Funding Facilities
A second bank facility has been put in place with the Commonwealth Bank of Australia, in addition to that with our long-term banking partner, Westpac. This provides increased flexibility and reduces our exposure to a single facility.
Divisional Performance (all figures in New Zealand dollars)
New Zealand Domestic
Sales revenues continued their improvement providing a year to date increase of 9.7% to $230.9 million. For the December quarter revenues improved by only 1.2% in what historically has been our strongest trading period.
EBITDA performance year to date improved 4.2% over the previous year to $28.6 million. This improvement was affected by a 6.1% decline in the December quarter.
Our New Zealand Domestic operations continue to benefit from our ability to utilise road, rail and coastal shipping as volumes fluctuate. However we remain disappointed that KiwiRail has failed to eliminate the freight subsidies afforded to the previous owners of the rail network by December 2008 as required in the sale and purchase agreement. It is unacceptable to subsidise a foreign company, particularly one which in our view has done no favours for New Zealand.
New Zealand International
By focusing on the development of both our import and export businesses, improvement in sales revenues was maintained, and resulted in a 5.7% increase to $81.0 million year to date, with the December quarter improving by 7.8%.
The establishment of a new Perishable Airfreight facility has been successful in attracting increased volume in the perishable export market. A number of substantial new customers will begin trading through this new facility following the financial year end.
EBITDA performance declined 14.3% to $2.8 million year to date as margins continued to contract as a consequence of excess shipping space availability and currency movements. Australian Domestic Sales growth improved 31.2% to $146.5 million. For the December quarter revenues improved 21.4% over the prior period.
EBITDA declined 23.6% year to date to $7.4 million with a decline of 32.9% for the quarter. EBITDA performance remained consistent in our Domestic Transport operation however our Warehousing and Logistics operation contributed to the majority of the decline. An accelerated programme to rationalise warehousing facilities in this operation has been underway since October.
Australia International
Sales revenues improved 50.2% to $162.3 million, largely as a result of the Halford acquisition.
EBITDA performance, although impacted by a slower than anticipated integration of the Halford operation, continued to improve - up 6.5% to $4.9 million. For the December quarter EBITDA improved 7.5%.
Integration of the remaining Halford offices is on schedule and will be completed by May 2009.
Asia International
Through the acquisition of the minority interests in the Asian business, our revenues increased from $4.9 million to $19.7 million. EBITDA performance continues to be impacted through increased investment in infrastructure to assist development of the region. EBITDA for the year to date was $2.0 million compared with $1.5 million last year. In the December quarter EBITDA was down 22.7% to $0.7 million.
United States
Our combined operations in the United States provided a revenue increase of 163.7% to $352.3 million. The newly acquired operations of Mainfreight USA contributed $204.2 million to this total. CaroTrans sales revenues were up 55.8%.
EBITDA year to date has improved 117.7% to $13.5 million. Mainfreight USA contributed $4.8 million. CaroTrans' contribution was increased by 67.4% to $8.7 million.
December quarterly sales revenue performance saw an increase of 86.1% with CaroTrans increasing their revenue by 71.8%.
Mainfreight USA's performance remains below our expectations; however we have identified a number of opportunities to further improve results from the business. Securing the necessary licences to provide freight services for US Government
agencies has seen a number of sales opportunities eventuate. Re-branding of the Mainfreight operations will be completed by the financial year end.
CaroTrans continues to develop its business with more direct services to Europe and South America, and while FCL volumes are declining, there is scope for a greater range of LCL services as average consignment size decreases. This provides CaroTrans with a greater opportunity to improve margins and services.
Trading between CaroTrans and Mainfreight USA has increased as Mainfreight develops its International programme.
Group Operating Cash Flows
Operating cash flows were $38.8 million compared to $34.3 million in the same period last year as a result of improved debtor collections.
Net capital expenditure for the year to date was $34.5 million. Of this property development totalled $22.9 million. Capital expenditure in the quarter totalled $14.3 million.
Summary
This result, while satisfactory year to date, has seen a decline in performance during the December quarter (traditionally our busiest period) when compared with the prior period in 2007 which was our largest ever. Trading through January saw lower than expected volumes in all divisions.
The labour freeze implemented in October has seen Group personnel numbers reduce by over 5% through natural attrition. Labour costs are reducing accordingly.
Further, our variable cost structures across most business units will continue to provide opportunity to improve margin and overheads.
We continue to maintain a cautious and fiscally prudent approach to costs and capital expenditure. Mainfreight has a strong balance sheet and sufficient levels of debt facility should this be required for further growth.
Small market share in our overseas markets continues to provide opportunity for sales growth with distressed competitors assisting this process.
Whilst current trading remains below expectations, we are focused and well positioned to take advantage of the opportunities that will arise in the current economic environment across the varied geographical markets that we have
expanded into.
For further information, please contact Don Braid, Group Managing Director,
phone +64-9-259 5503, +64-274 961 637 or email don@mainfreight.com.