Freightways Records Strong Half Year Result
Freightways Limited (NZX:FRE) was able to achieve record revenues and earnings for the half year ended 31 December 2006, in spite of the challenging business environment.
Consolidated operating revenue of $144 million for the half year was 11% higher than for the corresponding period 12 months ago, with earnings before interest, tax, depreciation and amortisation (EBITDA) of $33 million up by 6% over the same period.
Consolidated net profit after tax and before amortisation of $16.5 million for the half year was 3% higher than the previous corresponding period.
Managing Director Dean Bracewell says “the half year result reflects another strong period for Freightways that has continued to deliver upon its strategy.” As a result, Freightways has declared a dividend of $11.6 million reflecting this sound interim result which translates to 9.0 cents per share fully imputed to be paid on 31 March 2007. The record date for determination of entitlements to the dividend is 16 March 2007.
Six months ago, after reporting a record full year result, Mr Bracewell sounded a caution that while the core Freightways express package business (New Zealand Couriers, Post Haste Couriers, Castle Parcels, SUB60, Kiwi Express and Security Express) were expected to “perform soundly, growth in this market will be influenced by the performance of the domestic economy, which continues to show signs of slowing.”
He reports that “results over the last six months in this market were sound with revenue growth contributing to offset the higher cost of doing business during this period. This performance, despite lighter activity from existing customers, demonstrates the underlying strength of Freightways’ well recognised and strongly positioned brands.”
Recent key initiatives have been the initial implementation of in-van data capture that provides customers with access to real time service information and the agreement with Qantas to market its same day domestic freight capacity on the network of services it operates in New Zealand. In the business mail market, DX Mail continued to build its presence and was rewarded with growing demand for its services. Mr Bracewell says the acquisition in December of the franchisor rights of the Pete’s Post mail delivery business that operates in the central North Island is set “to contribute to the accelerated development of DX Mail’s own nationwide street delivery network.
The information management market continues to show sound growth in New Zealand as seen through Freightways’ established brands of Data Security Services, Archive Security and Document Destruction Services. “Our investment in the future of this business has recently included the purchase of our second Wellington site that houses one of our existing facilities and also provides adjacent land for expansion,” says Mr Bracewell. “Once completed this will more than double our current storage capacity at this site.”
In Australia, Mr Bracewell says the acquisition of DataBank, which operates in the data storage niche of the information management market in Sydney and Melbourne “has delivered against all initial expectations. As well as generating good quality revenue and earnings growth, it has assisted development in the Australian market, resulting in the expansion of DataBank into Brisbane.” In addition to data storage, he says a decision has been made to also invest in the provision of document storage services in Brisbane.
Looking ahead, Mr Bracewell says Freightways’ core express package businesses “will continue to be influenced by the performance of our domestic economy, albeit expectations are of continued sound performance.” He says “there have been some signs of improving activity amongst our existing customer base that in the previous 18 months had been showing signs of slowing down.” He expects DX Mail and the information management businesses to continue to deliver good positive growth.
Mr Bracewell also says acquisitions and alliance opportunities will continue to be investigated in all three market segments where Freightways has proven capability.
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