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Freightways first-half profit jumps 21% as sales, margins grow from couriers, data management

23 Feb 15

Freightways posted a 21 percent gain in first-half profit after lifting sales and fattening margins at its courier and information management units, allowing the company to declare a record interim dividend.

Profit rose to $26.3 million in the six months ended Dec. 31, an all-time high for the interim result, from $21.7 million a year earlier, the Auckland-based company said in a statement. Sales climbed to $241.8 million from $218.3 million.

Shares of Freightways rose 0.5 percent to $6.07 and have gained 29 percent in the past 12 months. Profit missed the $27.3 million forecast from brokerage First NZ Capital. Freightways gets 76 percent of sales and 75 percent of pretax earnings from express packages and business mail, which includes the NZ Couriers, Pist Haste, Sub 60 and DX Mail brands. It achieved a 10 percent uplift in revenue in those businesses to $185 million in the first half. Earnings before interest, tax and amortisation jumped 17 percent and its Ebita margin widened to 17.6 percent from 16.6 percent.

Sales from information management rose 12 percent to $58 million and Ebita climbed 18 percent to $11 million as the divisions Ebita margin widened to 19.6 percent from 18.6 percent.

"Both the express package & business mail and information management markets remain positive and Freightways' businesses remain well-positioned to benefit from the opportunities that exist in these markets," the company said. "The express package market is expected to continue to expand due to increasing activity amongst existing users and due to new volume created by online retailers."

Freightways also sees growing demand for business mail services and for information management services as companies look to outsource their document and computer media storage requirements. It didn't give specific guidance, although it said at its first-quarter results in October that it expected earnings growth in 2015.

The company will pay a first-half dividend of 12 cents a share, full imputed, up from 10 cents a year earlier, on April 7 with a record date of March 20.

Freightways said it would continue to seek out acquisitions and alliances "that complement its core capabilities" after bolstering its information management business by buying Australia's LitSupport for up to A$30 million including earnouts in a deal announced in December.

The company borrowed about $13 million in the first half to help fund acquisitions and for capital spending. It said a favourable exchange rate when converting Australian dollar borrowings into kiwi dollars meant net bank borrowings on its balance sheet only increase by $10 million.

Net cash inflows from operating activities rose by $9 million to $33 million, while the cash outflow from investing activities rose by $4 million, reflecting a $7 million increase on acquisitions spending, offset by a $3 million reduction in capital spending. For the full year, capital expenditure is forecast at $17 million.

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