Record Full Year Result For Freightways
Freightways (NZX:FRE) has delivered a record full year result showing a 17% improvement over the previous year in net profit after tax (NPAT, exclusive of non-recurring items) for the year ended 30 June 2012.
This has led to a final dividend being declared of 9.5 cents per share, fully imputed at a tax rate of 30%, representing a payout of approximately $14.6 million, compared with $11.2 million for the prior comparative period (pcp) final dividend of 7.25 cents per share. The final dividend will be paid on 1 October 2012. The record date for determination of entitlements to this dividend is 14 September 2012.
Freightways’ consolidated operating revenue of $382 million for the full year was up 8% on the pcp. This revenue growth led to earnings before interest, tax, depreciation and amortisation of intangibles (EBITDA, excluding non-recurring items) of $72 million and earnings before interest tax and amortisation of intangibles (EBITA, excluding non-recurring items) of $62 million for the full year, both up 9% on the pcp.
Consolidated NPAT (excluding non-recurring items) of $36m for the full year, was 17% higher than the pcp. Cash flows generated from operations were again strong at $70 million.
A one-off $1.5 million EBITA benefit ($1 million after tax) relating to proceeds from the Christchurch earthquake insurance claims made in the prior year has been treated as non-recurring and not included in the above revenue and earnings numbers. Similarly a one-off $1.3 million EBITA charge ($0.9 million after tax) relating to Christchurch earthquake costs was treated as non-recurring in the prior year and is excluded from the above pcp revenue and earnings numbers.
The Express Package & Business Mail division contributes 75% of group revenue from its brands of New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, SUB60, Security Express, Kiwi Express and DX Mail. The recently acquired DataPrint will operate as a separate brand alongside DX Mail.
Operating revenue for this division of $292 million for the full year was 5% above the pcp, with EBITDA of $53 million and EBITA of $48 million; higher by 7% and 8%, respectively. A particularly strong first quarter underpinned a very good first half year result. As expected, revenue in the second half was comparatively not as strong as in the first half, yet revenue growth nevertheless remained positive and consistent throughout that period.
“Increased volumes from existing customers, quality market share gains and price increases, including the recovery of higher fuel prices, underpinned the revenue growth,” says Mr Bracewell, “with growth in this division coming from all locations across New Zealand and from most industry sectors. On-line shopping continued to generate our fastest growing source of income.”
Mr Bracewell says that while activity levels in most businesses located in Christchurch have returned to pre-earthquake levels, DX Mail continues to be affected by relatively low tourism-related mail volume. At the same time, the overall cost of doing business in Christchurch has lifted due to the increased difficultly in moving around to effect pick-ups and deliveries and increased labour costs. Redevelopment of the Post Haste and Castle Parcels depots at Freightways’ Auckland hub is almost complete, which allows NOW Couriers to come onsite, having previously operated from another location.
The Information Management division, which generates 25% of Group earnings, reported operating revenue for the full year of $92 million, up 21% on the pcp.
In his report, Managing Director Dean Bracewell says that the contribution to both revenue and earnings from the Information Management division was particularly encouraging, with over half of this division’s revenue being generated in Australia, where Freightways now has a nationwide presence.
Mr Bracewell says the diversification strategy undertaken by Freightways in recent years “has broadened our revenue and earnings base and created a wide range of growth opportunities that are being successfully developed. In addition, the integration of recent acquisitions on both sides of the Tasman has added to the depth of Freightways’ presence in the Information Management industry.”
This division, that operates in New Zealand, through the brands of Online Security Services, Archive Security, Document Destruction Services and Data Security Services, is now firmly established in Australia through the brands DataBank, Archive Security, Filesaver and Shred-X.
Mr Bracewell says “the performance of the Information Management division and its demonstrated ability to sustain high levels of growth has been outstanding. New service lines have been added to our suite of services, adding breadth to our revenue and earnings growth profile.”
During the year Freightways acquired Iron Mountain’s New Zealand operations and the business and assets of Filesaver Pty Limited in Sydney. Restructuring and relocation costs relating to both acquisitions were expensed primarily within the first half of the year and the contribution of both businesses is tracking to expectation and evident in this division’s strong second half result.
The very strong growth produced by this division assisted in offsetting the increased costs associated with leasing significant additional capacity in New Zealand and Australia. Mr Bracewell says “part of this growth has come from winning nationwide customers in Australia that would not have been achieved without this investment. The storage and management of archived documents continues to be our fastest growing revenue stream. Strategic growth opportunities will continue to be explored and executed where they make commercial sense.”
All three internal service providers, Fieldair Holdings, Parceline Express and Freightways Information Services, continued to deliver outstanding service, underpinning the service offered by our front line businesses.
Looking ahead Mr Bracewell expects Freightways “to see continued gradual improvement in the markets it operates in, as experienced recently. The background of an uncertain global economy which may have an adverse impact on the economies of New Zealand and Australia will nevertheless influence Freightways future performance. Growth trends evident in this latest full year result in the Express Package & Business Mail division remain positive and we expect the Information Management division to continue to deliver sound year-on-year earnings growth.”
Capital expenditure for 2013 of $14 million is earmarked to support the growth and development of both Freightways divisions, with cash flows expected to remain strong throughout the next 12 months.
For further information contact:
Ph: (09) 571 9670
Fax: (09) 571 9671