Logistics specialist Mainfreight has posted a 15.2% drop in first quarter profits due to ailing European economies.
Net profit totalled $12.4 million in the three months ending June 30, down from $14.2 million for the same period in 2011.
Sales advanced 3.4% to $465 million, up from $449 million in 2011.
Mainfreight shares remained unchanged yesterday on $9.20 as the NZX 50 index rose 1.82 points.
Company results for the period, excluding the European division, saw sales improve 9.7% (excluding foreign exchange, 10.9%), and EBITDA improve 17.9% to $23.76 million (excluding foreign exchange, 19.0%).
A statement from Mainfreight says it is expected that the poor performance from European operations will continue through the first half of the financial year until the European summer holiday season is over, and new customer revenue is trading fully.
Aside from European performance, trading remains broadly in line with expectations, particularly the improvement shown by our Australian and USA operations.
Mainfreight continues to be mindful of trading conditions around the world, and is managing cost structures accordingly – and vigorously pursuing sales growth.
Market share gain is the focus across all of the company’s markets as they look for stronger revenue generation, particularly in the Air & Ocean sector.
New Zealand EBITDA improved 12.2% to NZ$11.29 million, compared to the same period last year, with sales revenues increasing 7.4% to NZ$111.94 million.
Both divisions, Domestic and Air & Ocean (previously known as International), showed improved results for the reporting period continuing the trends of the past.
Trading in July and August reflects similar levels of growth.
Australia
Australian business units continue to find improvement, particularly Domestic operations. EBITDA improved 19.6% to AU$5.11 million with sales improving 12.4% to AU$97.47 million.
Domestic operations are the standout performer in this region, where sales growth remains strong, exceeding 20%. Air & Ocean operations are seeing small improvements from the year prior and whilst this is satisfactory, stronger sales and EBITDA performance is expected.
Trading during July and August continues the trend in both operations.
Asia
Improved trading across most branch locations has seen revenue up 16.9% on the same period last year, to US$8.63 million, and an EBITDA increase of 30.2% to US$0.63 million.
Export growth in both sea and air freight dominates these improvements. Import volumes remain weak, and an area for improvement.
Focus is on stronger in-country sales to find more growth to and from this important market. European trade lane growth has not yet reached anticipated levels.
United States of America
Strong sales activity in Mainfreight USA’s Air & Ocean division has seen total US revenues improve 12.1% to US$91.62 million when compared to the same period last year. EBITDA performance improved a satisfactory 34.2% to US$4.08 million, again as a result of good growth from Mainfreight operations.
Mainfreight’s wholesale NVOCC operator, CaroTrans, has seen small improvements in sales and EBITDA performance, further progress is expected as strong sales activity extracts more market share.
Trading through July and August has seen these trends continue across both business units.
Mainfreight will be moving to half-yearly reporting going forward, making this our last quarter report. Future reporting dates are as follows:
• Half year to 30 September 2012 will be reported on 13 November 2012;
• Full year to 31 March 2013 will be reported on 29 May 2013.
Europe
Revenues declined 4.8% from the year prior to €62.84 million and EBITDA reduced by 53.5%% to €3.09 million. This EBITDA result was further hampered by poor results from Belgium transport operations.
Whilst new customers have begun trading within logistics operations, and improvements have been implemented across Belgian transport business, the European summer holiday period has negated the benefits of these changes. September will see this seasonal effect improve.
Mainfreight remains confident of the long-term benefits European entry has provided, including the opportunities that are coming from global customers and the interaction between trading entities across the world.
The strategy of strengthening links between our operations in all countries provides competitive advantage and opportunity for much stronger growth than has been capable in the past.
