Revenue, profit up for Freightways; acquisitions still on the agenda

Annual revenue and profit are up for transport company Freightways, which remains on the acquisition and expansion trail having bought four small Australian companies for $9.8million.

Freightways is targeting year-on-year growth again in 2019, noting more Australian acquisitions are being assessed and it expects its information management division in that country to surpass the New Zealand earnings.

Operating revenue grew by 7% to $580.8million for its year to June, profit before tax rose 4% to $84.6million and after-tax profit grew 2% to $62.1million.

Freightway's express package and business mail division, which generated 74% of revenue during the past year, returned revenue growth of 6.5% to $428.8million.

The company's information management division, accounting for 26% of revenue, had a similar 6.6% boost to revenue to $153.8million.

Freightway's final dividend rose from 14.75c last year to 15.25c, taking the full dividend to 29.25c. Its shares eased 4c down to $7.76c after the announcement.

Forsyth Barr broker Damian Foster said the result was ``marginally softer'' than anticipated. Underlying after-tax profit was up 5.7%, assisted by lower-than-expected interest and tax.

Net debt for the year increased by $4million to $154million, while debt to debt and equity gearing levels declined to below 40% for the year.

Freightways said as an employer of about 2900 people in New Zealand and a business partner with 1100 independent contractors, it would be closely monitoring employment law reform.

Mr Foster said Freightways had noted a tight labour market and its monitoring of reforms.

``We continue to be concerned that the labour cost inflation will be at a higher level over the next two to three years,'' he said.

Craigs Investment Partners broker also said it was a ``slightly weaker'' result than expected, particularly the Express Packaging business where second-half volume growth was weaker than the previous half.

``Freightways has pointed to weaker organic growth likely in full year 2019,'' he said.

He noted the Information Management result appeared to meet expectations, and the outlook statement was ``likewise a bit more upbeat''.

Freightways said its express package and business mail division result was a ``sound outcome'' particularly given increased costs in investment into network capacity, including chartering of an aircraft and moving to larger depots in Christchurch and Auckland's North Harbour.

All businesses in the company's information management division delivered improved results for the year, including Secure Destruction revenues, eDestruction and Medical Waste services.

``Growth in these digital services, while at an early stage, has been positive and was boosted by the winning of a major data collection and transformation project in New Zealand,'' the company said.

simon.hartley@odt.co.nz

 

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