Freightways Delivers Another Record Result
Strong demand for its services across all markets enabled New Zealand express package leader, Freightways Limited (NZX:FRE), to deliver record revenue and earnings for the year ended 30 June 2005.
Consolidated operating revenue for the year of $234 million was up 9% on the prior corresponding period, with earnings before interest, tax and amortisation (EBITA) of $50.5 million 24% ahead of the previous year.
Cash generated for the year from operations before interest and tax reached $54.9 million, while consolidated net profit after tax and before amortisation (NPATA) of $27 million was 28% higher than the prior corresponding period.
As a result, Freightways has declared a final dividend of $10.7 million, delivering a full year payout in line with its dividend policy. The final dividend translates to 8.5 cents per share (fully imputed), to be paid on 30 September 2005. The record date for determination of entitlements to the dividend is 16 September 2005. This brings the total payout in respect of the year to $20.2 million or 16 cents per share (fully imputed), 26% higher than the previous corresponding period.
According to Managing Director Dean Bracewell “Freightways has completed an exceptional year with several factors enabling the delivery of this result. These included a strong domestic economy and a competitive environment that delivered no surprises.”
In his report he says Freightways is a strong, successful business that is “well positioned to deliver continuing earnings growth and will continue to take consistent, well developed strategies to the market in areas where we have proven capability.”
Freightways does not however expect the economy to be as strong in 2006 as it has been in 2005, as has been evidenced by lower levels of activity at some customers in recent weeks. “This will have some effect on volume and consequently Freightways expects that while its 2006 performance will be positive it will not be as positive as 2005. At this early stage of the new financial year, Freightways remains comfortable with the market analysts’ 2006 NPATA range of between $26.2 million and $31.2 million.
Mr Bracewell’s report notes that the core express package businesses contributed the majority of Freightways’ revenue and earnings, with the key brands of New Zealand Couriers, Post Haste Couriers, Castle Parcels, SUB60 and Security Express all achieving strong growth. Incremental investment in network capacity across the group to accommodate future growth resulted in branch relocations to larger facilities in Christchurch and North Harbour in Auckland, as well as in several other smaller regional locations.
During the year a small Wellington point-to-point courier business was acquired and successfully merged with SUB60, while a number of alliance opportunities have been progressed. The main relationship established was with Mainfreight and enables a total supply chain solution to be offered to both Freightways and Mainfreight customers.
DX Mail again increased its contribution as it gained further sales traction in the business mail niche of the Postal Services market, while continued penetration in the document destruction, computer media storage and records management markets contributed to strong growth in Freightways’ smaller information management business of Online Security Services (Online). Online’s operations in both Auckland and Christchurch were relocated during the year due to growth and now operate from new, purpose-built, high-stud facilities with room for expansion.
Fielder Holdings Limited, which provides airfreight linehaul services to the express package brands, leased an additional and larger Convair 5800 aircraft through its subsidiary, Air Freight NZ Limited, to provide additional capacity on the main trunk route.
Mr Bracewell says capital investment in the region of $7 million is planned by Freightways for the next financial year “in areas that support the growth of our core and emerging businesses. Investment in our people and the infrastructure of the business will continue to be made to enable the achievement of our positioning and performance objectives. Subject to economic and business factors beyond our control, the outlook for Freightways, its shareholders and other stakeholders remains positive.”
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