Flat result expected from Mainfreight

Peter McIntyre.
Peter McIntyre.
Tough trading conditions in Europe are expected to undermine the half-year result for bellwether logistics company Mainfreight, further eroded by a weak foreign exchange with the euro.

Mainfreight is delivering its first-half trading report for 2013 today, with brokers expecting a flat result from the global air and sea freight and warehousing operator.

Operations in New Zealand and Australia continue to offset lacklustre performances in other economies around the world.

Craigs Investment Partners broker Peter McIntyre said first-half revenues were expected to increase by 4.4%, from $892.9 million a year ago to $932 million, but European earnings before interest, tax, depreciation and amortisation (Ebitda) would be slashed more than 55%, from $18.5 million to $8.1 million.

He forecast adjusted after-tax profit for the half would decline almost 6% from $30 million a year ago to $28.2 million.

"Mainfreight noted in its first quarter result a significant decline in European Ebitda, underpinned by key customer loss, operational issues in Belgium and a weak macro environment," he said.

For its full-year to March, Mainfreight posted a record $65.75 million annual profit, further boosted by retention of a $17 million earn-out payment, which could have gone to European acquisition Wim Bosman Group.

Mainfreight bought Netherlands-based Wim Bosman in early 2011, with 14 branches in six European countries, for 110 million; about $NZ205 million, at the time.

Forsyth Barr broker Peter Young said the first-half weakness was due to the performance of Wim Bosman and if that was not included, underlying Ebitda would have been up morethan 10% for Europe.

Today's first-half report appears set to reflect the past full-year, in that Mainfreight's New Zealand and Australian divisions then provided thecornerstone for earnings growth, while United States, Asian and European operations performed below expectations.

Mr McIntyre expected Ebitda for New Zealand to be up 13.8% at $25.3 million, Australia up 19.4% at $16.5 million, United States up 28.1% at $10.7 million, Asia up 22% at $1.7 million, but Europe down 56.3% at $8.1 million.

"A weaker New Zealand dollar and euro cross, down about 10%, further exacerbates the European headwinds," he said.

Mainfreight would be looking for signs of tradesettling in Europe, which was likely to take "at least" the next four to five quarters to do so.

Mr McIntyre said for Main-freight's second-half trading, he expected stronger performances from the European businesses and growth, particularly from operations in New Zealand and Australia.


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