Trading Update

An update on unaudited trading performance for the three months ended 30 September 2008 is provided below.

For the three months ended 30 September 2008, Freightways’ revenue totalled $92 million and earnings before interest, tax and goodwill amortisation (EBITA) amounted to $15.2 million. Compared to the prior corresponding period, this performance represents an increase in operating earnings of 5% and delivers a 3% increase in net profit after tax (NPAT).

Freightways’ core express package business has delivered a sound operating earnings result that again proves the resilience of its business model, its strong market positioning and the attractive features of its industry. The winter months of July and August, that included an extra accounting week compared to the prior year, were particularly quiet, whereas September has shown some positive improvement. Revenue improvement from quality market share gains and some pricing improvement have been able to lessen the effect of lower volumes from some existing customers. Costs continue to be well managed, albeit fuel cost increases related to this period will not be fully recovered until future reporting periods. The business mail division continues to rebuild earnings; however its performance at this stage remains below the previous year. Despite continuing to significantly grow its overall volume and revenue, a changing business mix from higher margin box-to-box volume to lower margin general postal volume has been detrimental to its earnings.

Freightways’ information management division is as expected continuing to deliver year on year earnings growth in both New Zealand and Australia. Freightways’ past strategic decision to enter this market to diversify its revenue base and geographical presence continues to prove its worth. Revenues in this division have shown notable resilience and continue to grow in spite of the economic cycle. The NPAT result includes interest costs associated with capital that we have invested in significant new facilities in Wellington and Queensland and in a new document storage business in Melbourne. These investment decisions provide capacity for future earnings growth.

Corporate costs have increased to support the development of Freightways in the Australian market. Funding costs have increased in line with the higher interest rate environment during this period compared to the prior year and to support recent strategic investment initiatives. Freightways’ finance facilities are not due for renewal until November 2010.

Given the challenging environment it is operating in, Freightways is pleased to deliver a trading update that again demonstrates its resilience and the successful execution of its growth strategies.

Results for the three (3) months ended 30 September (unaudited):

These latest results continue the strong historic performance of Freightways, as shown in the following graphs in relation to the last ten years’ financial performance (NB. Historic EBITA amounts for the years ended 30 June 1999 to 2003 have been presented on a pro-forma basis consistent with the Freightways Statement and Prospectus issued in August 2003).

Freightways Operating Revenue

Freightways EBITA

Outlook

Freightways’ core express package business is expected to continue to perform soundly overall in line with recent trends, although fluctuating month-on-month volume makes it difficult to accurately forecast near term performance. The business mail division is expected to continue to recover its performance against the prior year.

Freightways’ information management businesses both in New Zealand and Australia are expected to continue to improve their year-on-year performance.

In recent years, Freightways has successfully embarked on diversifying its activities both geographically and deeper into the information management market. Freightways will continue to seek and develop growth opportunities to support this strategy and continue to explore other opportunities that complement its existing capabilities. Capital allocation decisions associated with these growth initiatives will continue to be carefully and prudently considered.

In the near term, Freightways’ performance is expected to continue the trend shown in this and recent results announcements, subject to any further deterioration in the New Zealand and Australian economies. In the medium to long-term and subject to business factors beyond its control, Freightways is exceptionally well positioned to reap the benefits of any improvement in the marketplace and to deliver positive performance for shareholders and other stakeholders.

For further information contact:

DEAN BRACEWELL
Managing Director
Freightways Limited
Ph: (09) 571 9670
Fax: (09) 571 9671