The half-year financial statements from two NZX listed transport and logistics operators, Freightways and Fliway Group Limited, have both flagged volatilities in the current domestic and international markets.
New Zealand Post also released a financial statement saying it too is also struggling with falling letter volumes, and its parcel business is not meeting it’s volume expectations.
Freightways managing director Dean Bracewell warns the second half of the year will be challenging, given the current volatility in markets and the dairy downturn denting confidence.
“We can’t ignore what’s going on in global markets, the volatility that’s going on around the world. We can’t ignore the money gone out of the dairy sector here,” he told NBR.
“While there are still a lot of good things happening in the economy, we need to take those factors into account and then look at what is happening within our customer base,” says Bracewell.
Information management now makes up 30% of Freightways revenue, and it says this will grow, while express package and mail will remain at the same levels as the prior financial year.
Freightways’ business mail operator, DX Mail, continued to expand its postie network and is now offering five days a week delivery in an increasing number of urban locations throughout New Zealand. While the overall physical letters market continues to decline, the demand for DX Mail’s service is increasing.
New Zealand Post says its parcel volumes increased by 7% in the pre-Christmas period, compared with the previous year but the Group says there is a lot more it can do.
“We also need to get better and faster at supporting our front line teams to secure more parcels business,” says New Zealand Post Group chief executive, Brian Roche.
Freightways increased it operating revenue and net profit after tax both by 5% in the year to December 31, 2015, despite the fact there were four less trading days than the previous corresponding period.
Freightways operating revenue increased by 5% to $255 million, and net profit after tax (NPAT) grew by 5% to $28 million.
The company says its diversification into the Information Management industry is evident in this half year NPAT result.
In the near-term, however, and at least for the balance of the 2016 financial year, given the current volatility in markets around the world, Freightways says it is cautious in its outlook.
Fliway exceeds prospectus forecast
Despite volatile shipping rates and lower freight volumes, which are expected to continue for the rest of the year, Fliway Group says its half-year results exceeded estimates in its IPO prospectus.
Fliway Group Limited is reporting a proforma EBIT of $5.3 million and a NPAT of $3.6 million for the six months ended December 31, 2015 which exceeded the prospective financial information (PFI) estimate contained in its prospectus.
The Fliway International division saw lower revenue than forecast as a result of reduced shipping rates, and some customer churn.
The volatile pricing on shipping rates, combined with lower volumes, meant that the International division experienced softer revenue during the first half of FY16 than anticipated, and this will likely continue for the remainder of FY16.
Group revenue of $43.8 million for the 2016 half-year was below the 2015 half-year by 1.2%, and 2.1% below 2016 half-year PFI, as a result of a reduced recovery of fuel costs to customers in the transport business and lower international shipping rates.
Sound cost management resulting in a pro-forma EBIT of $5.3 million, for the first half year of 2016, was up 38.7% on the previous corresponding period and 22.8% ahead of the 2016 first half-year PFI forecast.
The resulting net profit after tax (NPAT) of $3.6 million was 59.8% above the prior year and 25.0% above PFI.
“The 2016 interim result is the second and final forecast reporting point the business was required to meet following NZX listing in April 2015,” says Fliway Group chair Craig Stobo.
High productivity motor vehicles (HPMV) pay off
Fliway says its domestic transport business unit continued to improve its operating costs.
This improvement was sparked by capital investment in High Productivity Motor Vehicles (HPMV), before the IPO, allowing more efficient freight movement, and allowed Fliway to optimise it base line long-haul costs.
The transport business unit also benefited from the ongoing strategy of selling to capacity in the network.
Larger warehouse premises in Auckland allowed Fliway to facilitate growth from existing customers, and take on new business, resulting in both higher storage and activity revenues.
New customers signed up in the second half of 2015 resulted in the Wellington warehouse being fully utilised.
In November 2015, the Fliway transport business unit moved into its new Christchurch site, which delivers a larger, more efficient transport dock.
The completed 5000 square metre building saw the warehousing business relocate there in February 2016, providing additional capacity of 2000 square metres for new and current customers.
This new site will allow Fliway to facilitate growth in customer warehousing requirements within the Christchurch market.
