Bellwether global transport and logistics company Mainfreight Ltd (NZX: MFT) has delivered a strong first half result, especially from New Zealand and European operations.
Revenue for the half to September rose 16.8% to $1.43 billion, earnings before interest, tax, depreciation and amortisation (ebitda) was up 22.1% to $108.3 million and after-tax profit climbed 30.7% to $55.9 M. Of total revenue, 76% was derived from offshore divisions and provided 58% of ebitda.
Mainfreight's interim dividend rose by 3 cents from a year ago to 22¢. Mainfreight shares rose 4.1% to $29.95 following the announcement; being 18.5% up on a year ago.
Craigs Investment Partners broker Peter McIntyre said it was a good result with most divisions berating expectations, with New Zealand and European profit margins in particular stronger than expected.
“The main exception was Australia, which showed revenue growth in line with expectations, but higher growth-related operating costs affected its ebitda,” he said.
Asian sales revenues were up 7.2%, the US 16.8%, Europe 12.2%, New Zealand 8.3% and Australia by 16.7%.
Forsyth Barr broker Damian Foster said it was a very strong first half result, and above expectations.
“We expect full year earnings upgrades as a result,” he said.
While recognising Mainfreight was operating against a relatively weak comparative period last year, is was still a very strong result.
“Geographically all businesses contributed with margin expansion achieved in all divisions, with the exception of Australia,” he said.
New Zealand revenue was $343.1 M, up 8.3% compared with the same period a year earlier, with domestic freight volumes hitting record levels, BusinessDesk reported.
Mainfreight managing director Don Braid said a billion dollars was earned offshore in terms of revenue in this first half alone.
“What is changing is that we have had good contributions at the ebitda level from all five regions. No longer are we lagging in Europe or the Americas or Asia,” BusinessDesk reported.
Australian revenue was $A341.7 M, up 16.7% and Mainfreight noted that freight volumes continue to grow heading into the pre-Christmas period. In Asia, revenue lifted 7.2% to $US40.2 M and the company said network development across South East Asia gained momentum with its first Malaysian operation opening on October 15, after the end of the 2018 financial year.
Mainfreight also expects to have its first Japanese operation open in early 2019, with licensing and business documentation requirements completed and accepted by Japanese authorities.
The Americas saw revenue lift 16.8% to $US237 M, with performance largely driven by its domestic transport operations, where there were new customer gains.
The air and ocean operations saw revenues increase in the Americas but gross margins declined, the company said.
However, “improvements in margin are evident during October and November, providing confidence for an improved EBITDA result from Air & Ocean at year end,” the company said.
European revenue lifted 12.2% to €182.33 M, with sales growth across all divisions.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.