- 30 May 2006
Financial Result for the Twelve Months Ended March 2006 (Unaudited)
The Mainfreight Group is pleased to report a record net profit after taxation of $29.035 million for the twelve months of the 2006 financial year. This represents a $15.52 million, or 115%, increase when compared to the same period last year and is more than the combined total of the previous three years’ results. EBIT grew from $24.14 million to $48.48 million, an increase of 101%.
Consolidated revenues (sales) increased to $887 million from $857 million; an increase of $29.47 million. Excluding divested business units and foreign exchange, this is an increase of 7.4%.
Group performance has met expectations that were signaled during the year with all divisions contributing positively to the result.
Profit performance from our overseas based operations has been considerable. Our off-shore business units now contribute 43% to our EBIT and their combined revenue now exceeds 52% of the Group’s total sales.
Our combined Australian operations improved their EBIT performance to $17 million from $8 million last year. An increase of 114%.
Our United States operations of CaroTrans improved their EBIT performance to $4 million, an increase of 129%.
Our associates in the United Kingdom and China continued their improvements, albeit at levels of growth below our expectations.
Our off shore divisions represent significant future growth opportunities as we continue our global supply chain logistics expansion.
Trading conditions in all countries of operation were positive throughout the year. This enabled all our business units to grow organically.
Divisional Performance
New Zealand Domestic
EBIT improved to $24.78 million, an increase of 9.8%. Domestic revenues increased 1.5% to $269.18 million. Current trading revenues in domestic logistics and freight remain on a par with the previous year. The Owens transport and logistics operations now contribute positively to this division.
Completion of the new Auckland “Super Site” is expected in September 2006 and will assist further growth in the large Auckland market.
New Zealand International
EBIT improved to $2.65 million, an increase of 10.9%. Revenues increased 6.5% to $148.89 million.
While all four brands improved on last year’s performance, we have yet to achieve the levels of desired growth. Therefore in light of the commonality in agencies and trade lane focus, we have merged the operations of Mainfreight International and Owens International. The merged business will now be known as Mainfreight Owens International. This is a subsequent event to the year end and is effective May 2006.
Australian Domestic
EBIT improved to $4.16 million, an increase of 810%. Our best ever performance in this division. Revenues continued their improvement to $100.06 million, an increase of 14.1%.
Domestic freight and managed warehousing opportunities continue to be strong as our brands in this market continue to strengthen.
Australian International
EBIT improved to $12.86 million, an increase of 71.5%. Revenues improved 7.6% to $279.45 million.
All three business units performed well during the year. Good organic growth has been achieved with a greater focus on trade lane development.
USA International
EBIT improved to $4.03 million, an increase of 129%. Revenues improved to $88.94 million, an increase of 15.5%.
The maturing of this business now provides a very sound platform for which to grow a significant business in one of the world’s largest economies.
This business also provides an important gateway for Mainfreight to access the developing South American and European markets.
Associates
Satisfactory returns were received from our associated businesses contributing $2.32 million to our net surplus, an increase of 12.6%
The proposed sale of Hirepool will have a positive effect on our balance sheet. It is expected the result of this sale will be available to us during 2006. While the additional funds will further improve debt to equity ratios, our determination to grow and acquire further businesses will ensure any surplus funds are well utilised.
Group Operating Cash Flows
Operating cash flows were $47.40 million compared with $10.94 million last year.
Additional working capital requirements for the Owens acquisition impacted the previous year’s cash flows. Future operating cash flow trends are expected to be consistent with profit performance.
During the year net capital expenditure totaled $28.19 million. Property development accounted for $20.60 million of this. The remaining minority shareholding in Owens Group was purchased in June 2005 for $13.88 million.
There were no significant divestments during the year.
Net debt increased from $58.92 million to $61.69 million.
Balance Sheet
We have changed our accounting policy regarding the valuation of land with effect from 31 March 2006 to carry the freehold land at fair value, this has resulted in land being revalued upwards by $32.8 million to $43.4 million.
Dividends
The Directors have approved a final dividend of 7 cents per share fully imputed with the books closing on the 14th of July 2006, payment will be made on the 21st of July 2006. This takes the full dividend for the year to 12 cents per share, up from 6.5 cents per share last year. This reflects the improved level of earnings achieved and our expectations for growth in the years ahead.
This future growth, predominantly outside of New Zealand, will continue to require a high level of retained earnings.
The April trading result was impacted by the reduced amount of trading days in New Zealand and Australia when compared with last year. May results are improved on the previous year and expectations for the remainder of the year are positive.
This past year has fulfilled our expectations to have every division contributing positively. Our net surplus confirms the opportunities we see for future growth in our global business.
This is an exciting and challenging era for our company.
For further information, please contact:
Don Braid
Group Managing Director