An update on the unaudited trading performance of Freightways Limited (Freightways) for the three months ended 30 September 2010 is provided below.
Freightways’ revenue totalled $85 million, a 4% increase on the prior comparative period (pcp). Earnings before interest, tax, depreciation and goodwill amortisation (EBITDA) of $15.4 million was 2% above the pcp and earnings before interest, tax and goodwill amortisation (EBITA) of $13.0 million was 3% above the pcp. These operating results most importantly demonstrate that despite a difficult operating environment Freightways has been able to slightly improve its operating performance compared to the pcp. Net profit after tax (NPAT) of $6.7 million is 4% below the prior year due to the higher cost of bank margins in this period compared to the pcp.
As anticipated, Freightways’ express package & business mail division’s performance has reflected the slow pace of the economic recovery. Overall activity and business mix remains at similar levels to that seen in the latter half of the prior year. Operating earnings in this division for the September quarter were on a par with the pcp.
Freightways’ information management division on the other hand continues to perform particularly well. It has once again demonstrated its resilience to the economic cycle and has contributed operating earnings growth of 26% above the pcp. Our recent investment in additional capacity in Melbourne and Wellington has been well received by the market and demand for our services in these locations has accelerated. This growing demand has led to decisions to invest in additional storage capacity in Sydney, Perth, Adelaide and Auckland during 2011. This investment will reap future rewards as utilisation of this capacity increases. We have also recently extended our service footprint by establishing the Shred-X brand in South Australia and New South Wales.
The Christchurch earthquake affected all Freightways businesses operating in Christchurch in some way. Most importantly none of our team was injured, despite several being at work during the time of the earthquake. Our express package & business mail operations implemented contingency plans locally and through the support of their team mates in the rest of New Zealand ensured minimal disruption to service, except where access was restricted. We have continued to work closely with customers who have relocated or are operating out of temporary premises to maintain service levels. The document storage division of our Christchurch information management business was more severely affected with collapsed racking restricting our ability to provide normal levels of service to our customers. The project to extract archive boxes, rebuild racking and return to normal service is well advanced.
Freightways Operating Revenue
Recently re-negotiated finance facilities provide 5-year funding for around a third of our finance facilities until September 2015. The balance of the facilities is available through to September 2012, at which point that portion will be re-negotiated. Assurance of funding is a key issue for most businesses in this continuing uncertain economic environment. This 5-year component of our finance facilities demonstrates the support of Freightways’ banking syndicate and provides important diversity of tenure and funding certainty for the company.
We anticipate a continuing slow domestic economic recovery. While a number of encouraging signs continue to emerge in some of our businesses, this is not yet the case across all businesses. As such we must remain cautious in the outlook for our core express package & business mail division.
The information management division is expected to continue its sound growth. While the cost of increased capacity will start coming to bear throughout the balance of the 2011 financial year, the benefit derived from the recurring nature of the revenue with which we utilise this capacity willdrivesustainablelong-term value.
Forecast capital expenditure in 2011 of approximately $13 million is similar to 2010 levels. Overall, cash flows are expected to continue to remain strong throughout the year.
In recent years, Freightways has strengthened its earnings profile by diversifying its activities both geographically and deeper into the information management market. Growth opportunities that complement its core capabilities will continue to be sought and developed to support this strategy.
Subject to factors beyond its control, Freightways remains very well positioned with quality capacity to benefit from an improving Australasian economy and from growth in the markets we operate in.
For further information contact:
Ph: (09) 571 9670
Fax: (09) 571 9671