27 May 2020

Mainfreight posts $148m profit but future is uncertain

11:58 am on 27 May 2020

Mainfreight has delivered another full year profit on stronger revenue, but says the outlook for the new financial year is uncertain.

No caption

Photo: Wikimedia Commons

New Zealand's biggest transport company's net profit rose 4.9 percent in the year ended in March to $148 million, which included a number of one-time gains and costs as well as tax adjustments.

The underlying net profit rose 10.6 percent to $156.1m, excluding those items, while revenue rose 4.8 percent to $3.1 billion.

The company said it was pleased with the result and positioned it well to deal with the ongoing supply chain disruptions brought about by the Covid-19 pandemic, as well as the depressed economic conditions.

"Well it is a good result, but of course what we're more interested in is what's in front of us rather than what's behind us, and we are somewhat cautious about that," managing director Don Braid said.

"April certainly was a tough month but we've seen improvement during May, and our Australian business has gone very well, and that's assisted us.

"As well as we're starting to see some improvements here in New Zealand and across some of the other regions that we're in."

Trading across the global business for the seven weeks from 1 April, had seen sales revenues improve by 5.7 percent on the year earlier, bolstered in part by air charter revenues.

However, overall margins were down, with an estimated $6.5m drop in pre-tax operating profit to $9m in the seven-week period to 19 May.

"I think, for us, the USA is of more concern than most of the other regions," Braid said, adding the volume of business in the Americas had declined significantly, but the value of sales was steady.

"They were still trading okay in April, but they got to the shutdown later and we think they'll be later and longer," he said, adding the Americas remained a key area of development potential for the group.

New Zealand's sales revenue was down 16 percent, while the partial lockdown in Australia saw revenue rise 13 percent.

"Australia has just not missed a beat. They've continued right through April and May and they've been the highlight of trading since a year end," he said.

The European business was mixed with an overall 5 percent decline in sales, while Asia improved 41 percent in April and May.

"Asia is back and operating. Their biggest problem is being able to secure space, and for manufacturers to place orders.

"Of course in the US, if they're not receiving, there's no point in shipping."

Despite the uncertain conditions, Mainfreight said it remained cautiously optimistic and the board had approved a final dividend of 34 cents a share, which was the same as last year's.

Get the RNZ app

for ad-free news and current affairs