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Freightways is enjoying elevated activity as growth in e-commerce continues, Forsyth Barr broker Lyn Howe says.
The company reported operating earnings of $56.1million for the six months ended December, up 8.4% on the previous corresponding period.
Its reported profit fell nearly 8% to $31.4million from $34million following an increase in depreciation and amortisation. A lift in abnormals, after tax of $4.7 million from the previous period, lifted the underlying profit by 7% to $32.4million.
Ms Howe said the only surprise was the interim dividend, which at 14.5c per share was up from 13cps.
Express package operating earnings increased 5% on 7% margin growth and information management's operating profit grew 9% on 7% higher revenue.
``Overall earnings before interest, interest, tax and amortisation margins are flat on the prior year despite revenue growth, reflecting the continued need to invest in capacity.''
Cash flow conversion remained high and net debt increased $7million to $165million.
The company did not provide guidance and typically offered generic commentary on the operating environment and earnings outlook.
The latest result was no different, as the company outlined it was targeting earnings growth again for the 2018 financial year, Ms Howe said.
Freightways made reference to the growth in express package volume and the need for continued investment in IT development and new initiatives to service the projected business-to-business and business-to-consumer volume growth.
``While this is contributing to robust revenue growth, costs are also rising given the need to invest in capacity and the high cost nature of the last mile for residential deliveries.''
The margin outlook appeared constrained, with limited operating leverage available. Forsyth Barr rated Freightways as ``underperform'', she said.