- 30 May 2005
Financial Result for the Twelve Months Ended March 2005 (Unaudited)
Mainfreight has posted a record net surplus of $13.520 million including Owens trading and purchase related costs. This is an increase of 126.5% over the previous year’s combined result.
The net surplus analysis is as follows:
NZ$M This Year Last Year
Mainfreight Trading $21.566 $12.188
Owens Trading $0.212 ($3.512)
Owens Acquisition Costs ($3.992) ($1.497)
Restructuring Costs ($4.266) ($1.211)
Group Net Surplus $13.520 $5.968
Consolidated revenues (sales) for the Group were $857.043 million, up $197.169 million on the previous year. Excluding foreign exchange currency movements and acquisition revenues, sales increased 13.6%.
Group performance has been better than expected and the record net surplus result has been delivered through better performance across all of the Group’s activities.
Highlights include a substantial reduction in losses in the Australian Domestic operations, a large increase in profit from our Australian, US and Asian International operations and the continuing strength and profit contributions from our New Zealand Domestic business units.
While economic conditions assisted our growth across all brands and countries, of more importance and significance remains the internal performances and growing strength across the supply chain activities. In particular the unity and operational advances that continue to improve the company’s competitive positioning.
Divisional Performance
New Zealand Domestic
Revenues continue to grow and finished the year at $201.118 million, an increase of 10.7%. EBIT improved to $22.932 million, up 12.3%.
Performance remains strong in this division, where both organic domestic freight sales continue to improve as market share increases, as well as the benefits of our supply chain strategies adding further growth and opportunity. Managed warehousing activities continue to play an important role in supply chain activity and their growth and profitability continue to improve.
New Zealand International
Revenues and EBIT reduced to $66.066 million and $1.905 million respectively. While improvement continues within Mainfreight International to a divisional record, performance within LEP was below expectations.
Australian Domestic
Revenues excluding foreign exchange movements have improved 41.1%. EBIT improved from last year’s negative $5.470 million to negative $0.315 million.
This satisfactory improvement results directly from the changes made during the past two years. The renewed focus of concentrating on our core activities of “day definite” delivered LCL freight distribution activity and profitable managed warehousing sees growth and profitability continuing as we expand our presence in the Australian market place.
We remain confident of this growth and long term profitability in what has been, in the past, our most challenging division.
Australian International
A successful year for our International operations in Australia. Revenues increased to $199.017 million and EBIT to $7.161 million, an improvement of 55.6%.
Organic sales growth and margin improvement in LEP International saw record profits from this division. The acquisition of Owens International by Mainfreight International assisted both revenue and profitability, albeit at levels below expectations. Trading for the future remains positive as margin levels improve in Mainfreight International, and as LEP continues its improved performance.
USA International
CaroTrans improved revenues to US$51.913 million, up 29.8%. EBIT improved to US$1.185 million, an increase of US$1.050 million over the previous year.
Satisfactory growth and performance from this division as it positions itself to take further market share and develops more freight opportunities within our “Triangle of Influence” in China and Australasia.
Asian Associates
As growth continues within our Australasian and American interests so too does our performance in Asia. Total revenues increased to $US 12.017 million and EBIT improved to $US1.142 million, an improvement of 21.6%. The new office of Ningbo performed satisfactorily with growth continuing in Shanghai and Hong Kong.
Group Operating Cash Flows
Operating cash flows for the year finished at $10.943 million compared with $16.816 million for the previous year. This decrease resulted from Owens Group cash flow requirement during the first six months of the year. The second half saw operating cash flows of $17.882 million compared with $11.030 million in the previous period.
$20.242 million of borrowings were repaid during the year. Divestment activities within Owens Group assisted.
Capital Expenditure requirements for property development during 2005 and 2006 will be considerable. This includes the construction of our new Auckland facility and the extensions to property in Tauranga, Rotorua and Daily Freight Auckland.
Dividends
The Directors have approved a final dividend of 3.5 cents per share fully imputed, with the books closing on the 15th of July 2005, payment made on the 22nd of July 2005. This takes the full dividend for the year to 6.5 cents per share and while this has been consistent for the past 5 years, the Directors have signalled that this is to be reviewed upwards, dependent on performance during the new financial year.
This past year’s performance as well as achieving a record net profit has established significant gains in business unit performance throughout the Group that will provide a sound platform for future growth.
The consolidation and restructure of Owens was accomplished successfully and is now positioned to improve further. Our full takeover offer is expected to be completed by early August, with delisting of Owens Group expected by mid July.
The consolidation of Owens Group into Mainfreight will enable greater operating synergies and cost reductions are likely with less administrative activity.
Trading for April and May remains positive and is ahead of the same period last year. We expect this to continue through the first quarter.
Our strength and focus in the supply chain logistics market continues to improve and provide increasing returns for the business. We remain committed to our direction and investments and expect our returns to continue to improve, therefore providing the benefits expected to the family of Mainfreight, our customers and our shareholders.
For further information, please contact:
Don Braid
Group Managing Director