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Mainfreight heading for strong half year result

Andrea Fox, NZ Herald,
Publish Date
Fri, 21 Oct 2022, 2:44PM
Photo / Supplied
Photo / Supplied

Mainfreight heading for strong half year result

Andrea Fox, NZ Herald,
Publish Date
Fri, 21 Oct 2022, 2:44PM

Mainfreight says its estimated profit before tax has improved nearly 66 per cent to $301.7 million after 26 weeks of trading.

Estimated revenue after 26 weeks trading had improved 32.5 per cent to $3.01 billion, the international transport and logistics company said in a market update during an investor day presentation.

The NZX-listed company will post its half year results on November 10.

It outlined the profit estimate ahead of its 2023 half year result next month.

A presentation by group managing director Don Braid and senior managers took investors through the company's global situation and outlooks, region by region.

The New Zealand operation had shown good momentum in the 26 weeks, with all divisions trading ahead year-to-date.

Profit before tax for the six months was up 55.2 per cent at $75m. Revenue was up 29.6 per cent at $645m.

The New Zealand operation employed 2940 people in 88 branches and 28 locations.

Planned capital expenditure on property and network development for New Zealand in 2023-2024 was $203m.

Mainfreight's Europe operation showed an 87.6 per cent lift in profit before tax to €23.6m ($40.6m) and a revenue increase of 27.2 per cent to €331m ($570m).

Employing 3353 people, the company operates 47 branches in 10 European countries.

Transport volumes were consistent year-to-date, and in general each division was trading ahead of the previous period.

Inflation and high energy process costs were a cloud on the horizon, with ample opportunity for growth in all countries.

European transport volumes were consistent year-to-date, and the air and ocean division showed strong trading.

With Asia-Europe ocean rates falling significantly, rate and contract management was important.

Challenges in Europe included shortages of drivers, people, equipment and warehouses and rising costs.

In Australia, where expansion was underway, profit before tax was up 42.2 per cent at A$63m ($69m) and revenue 33 per cent higher at A$698m ($772m).

This operation employs 2524 people with 71 branches in 21 locations. Network expansion would increase branches to 98 in 35 locations.

Warehousing would increase 36 per cent within 12 months from 233,989sqm to 318,320sqm.

The current trading outlook was strong and while Australia's economy was resilient, six interest rate rises would bite, the company said.

It cited emerging opportunities in mining, electronics, automotive and marine sector work.

In the Americas division, profit before tax for the six months was 69 per cent up at US$59m (S103m) and revenue had lifted 27.7 per cent to US$563m ($991m).

This operation employed 1770 people in 80 branches in four countries.

All divisions were contributing positively to year-on-year growth.

Air and ocean consolidation remained a key area of focus, with strong customer demand generally driving Mainfreight to open larger and new warehouses.

The company was optimistic about growth opportunities but was not immune to air and ocean trade and rates declines.

This was offset by growth in all segments and across a variety of trade lanes.

New warehouse sites acquired

For Asia, profit before tax was up 37.7 per cent US$16m ($28m) for the six months to date, on a 9.1 per cent fall in revenue to US$100m ($176m).

The decline was due to the impact of rate reductions.

This operation employed 520 people in 29 branches in 10 countries.

Airfreight exporting remained challenging from Hong Kong and China due to ongoing restrictions in China, the company said.

Ocean exports had also softened however this offered more value-added local service opportunities.

In-country growth was notable especially in Korea, Japan, Malaysia, Hong Kong and Thailand.

The company was intensifying its branch network within each country and warehousing solutions were underway.

Five more air and ocean branches would be added in China, Thailand, Taiwan and Korea in the next financial year, and Mainfreight would add an 11th country, India, to its business by the third quarter of 2023.

Four new warehouse sites had been acquired in Japan, Malaysia, Thailand and Vietnam.

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