21 August 2008

Financial Result for the Three Months Ended June 2008 (Unaudited)

The Mainfreight Group is pleased to report a net surplus after taxation and before abnormals of $8.22 million.When compared to the same period last year excluding abnormals, this is an increase of 40.7% or $2.38 million.  The prior year’s result after abnormals included the gain on sale of $61.20 million from the divestment of the Company’s interests in LEP and Pan Orient. 

Consolidated sales revenues for the period were $289.07 million compared to $178.01 million, an increase of 62.4%.  Excluding foreign exchange adjustments, the increase is 61.5%. 

EBITDA performance improved to $16.56 million, from the prior year’s result of $11.89 million; an increase of 39.2% (excluding foreign exchange, 39.5%). 

This improved performance came from our operations in New Zealand and the United States of America.  A decline of 12.4% was seen in EBITDA contributions from our Domestic operations in Australia as costs are incurred to assist our growth strategies there.  Asia performed in line with last year, as it too incurred additional costs to assist development. 

Divisional Performance

New Zealand Domestic

Strong market share gains have seen our revenue levels increase 17.9% for the period.  Of the $11.50 million in increased revenue, $5.81 million relates to business from new customers – half generated from client gains during the previous financial year, and half in this immediate past quarter.  While established customer tonnage trades at similar levels to the prior period, this increased market share has provided good growth during challenging economic conditions.  Margins are in line with last year. 

New Zealand International

Revenues have improved on the previous period by 3.1% to $23.92 million.  EBITDA performance is in line with last year.  Poor export volumes, particularly in perishable airfreight, continue to restrict growth.  A strong focus on import growth remains a priority.


Australian Domestic

Excluding foreign exchange, revenues continued to improve increasing 32.8% to AU$36.79 million.  EBITDA however declined 18.6% as additional costs are incurred to fulfil our growth strategies for the future.  Redundant property costs incurred during this period were AU$0.50 million.  These costs will reduce as sub-leasing arrangements for these properties are entered into.  


Australian International

Revenues continued to improve, up 9.8% to AU$29.69 million.  EBITDA excluding foreign exchange declined 3.6%, primarily as a result of increasing labour costs and declining margins in the Asian trade. 


Halford International was acquired effective 1 July 2008.  Results from this acquisition will be declared in our half-yearly result due November 2008.  Integration has begun well and is expected to be fully established, including a brand change to Mainfreight, prior to the end of the second quarter.  


United States of America

The Group’s US-based operating divisions, Mainfreight USA and CaroTrans, reported revenues for the period of US$79.66 million, and a combined EBITDA of US$3.63 million. (There was no contribution from Mainfreight USA for the same period last year). 


To provide guidance on our progress in each division, the following is relevant: 


Mainfreight USA improved revenues to US$47.52 million; an increase of 6.0%.  EBITDA contribution totalled US$1.70 million, an increase over the prior period of 60.1%.  The integration of Mainfreight USA is progressing well.  


CaroTrans continues to show improved revenue levels, particularly in export volumes, increasing 51.2% to US$32.13 million.  EBITDA performance increased 40.3% to US$1.93 million (excluding foreign exchange, 45.8%).  The US currency conversion rate utilised for this first quarter was 77.0 cents. 


Asia International

Our Asian operations traded as an associate during the prior period.  Revenues improved 33.4% to US$3.84 million; EBITDA was in line with the previous period at US$0.45 million.  


As with Australia, additional costs have been incurred to assist with our future growth strategies in the region.  As revenues and margins improve, it is expected that EBITDA performance will increase accordingly. 


Group Operating Cash Flows

Operating cash flows were ahead of last year, improving 20.6% from $12.88 million to $15.54 million.   


Capital Expenditure in the quarter totalled $6.58 million, of which $3.83 million is related to property. 



This improved performance over the prior period is satisfactory, and includes the benefit of having no Easter disruption in the current year.  July and August trading is in line with last year, and we remain cautiously optimistic about our performance for the remainder of the year.  While divisional performance may be impacted by the challenging economic conditions, we are confident that our spread of operations across a wide range of countries and economies continues to offer Mainfreight many growth opportunities.    


For further information, please contact Don Braid, Group Managing Director, telephone +64 9 259 5503, +64 274 961 637 or email don@mainfreight.com.

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