Freightways yesterday posted a $20 million, 10% increase in
profit, as expected by the market, but with the whittling of
margins in some areas.
Group revenue was up 7.6% to $206.7 million, while earnings
before interest, tax, depreciation and amortisation were up
9% at $39.6 million, for the first half, to December 2012.
While an after-tax profit of $21 million was booked, that
included $1 million of an earn-out payment not required to be
paid, resulting in an after-tax profit of $20 million, which
was 10% higher than in the same period last year.
Craigs Investment Partners broker Peter McIntyre said the
results were in line with expectations, the consensus of
analysts being for an after-tax profit of $20.6 million.
''Freightways is gaining traction from reasonable operating
leverage generated by the extra revenue growth,'' he said of
the courier and data management company.
While the company was confident momentum would continue
during the second half of trading, its key concern was
''macro uncertainty'' based on the global economic outlook,
Forsyth Barr broker Peter Young said the revenue growth was
driven by in-house and acquisition growth, volumes having
risen 2.3% and pricing contributing 2.3% and acquisitions
''Net debt remains healthy at $174 million, with the capacity
for further merger and acquisitions,'' he said.
Shares in Freightways, which announced a 9c interim dividend,
were down 0.4% at $4.48 after the announcement.
Mr McIntyre said margins were affected and were ''down 100
basis points from the second half of 2012, because of weak
recycled paper prices''.
Similarly, Mr Young said ''key negatives'' of the report
included margin contraction in Express Mail, down 20 basis
points, and recycled paper margins being lower than expected.
The $1 million reversal of the earn-out on the company's
acquisition in November 2010 of Universal Mail, a New
Zealand-based international postal service provider, was
because it did not meet agreed targets.
Managing director Dean Bracewell said Universal Mail had been
affected by the Christchurch earthquakes and disruptions to
large tourist outlets in the city, although the business was
''We remain optimistic about the future,'' BusinessDesk
reported Mr Bracewell as saying.