Freightways has posted a net profit of $40.9 million for its half year result with express package volumes up “marginally” on the year prior but a slowdown in temperature-controlled transport.
The result was down 9.5% compared to a net profit of $45.2m in the same period the previous year.
The firm says this was the result of higher interest costs of $4m and higher amortisation following the recent acquisition of Allied Express in Australia.
The listed transport, logistics and express package firm saw a 12.4% year-on-year increase in operating revenue to $620.7m for the six months to December 31.
This was on the back of a solid performance in its Allied Express business.
Volumes were marginally up on the prior comparative period in its express package operations, with market share gains offset by continued lower same-customer volumes. Information management also saw a small improvement on the prior period. Revenue for the division was up 15% to $517.1m.
Earnings before interest, tax and amortisation (EBITA) was down 0.5% to $80.8m and reflected the flow through of higher labour costs, Big Chill’s rent at Ruakura Superhub and a slow-down of some of customer activity, especially in temperature-controlled transport.
Big Chill’s transport revenue declined by 6% over the period. Utilisation in the new 3PL facility at Ruakura was 48% at the end of the half year and is forecast to increase to 70% by the end of the full year.
New Zealand network couriers delivered a “steady result” against the previous period, with volumes up 1.8% y/y, aided by a contribution (of around 3% of total volumes) from international inbound eCommerce.
Same-customer volumes continued at a similar rate to Q1 with an approximate 5% decline on the previous period while market share gains provided the growth, Freightways says.
“We expect that FY24 will reflect the tail of much higher-than-average labour cost increases, as a result of very tight labour markets in both NZ and Australia, as well as of a muted organic growth profile in most areas in which we pick up, process and deliver,” it says.
The company says it’s well positioned and its focus will be on restoring margins in FY25 and FY26 with labour markets “appearing to return to normal levels” and temperature controlled logistics and waste renewal both well-resourced for growth.
The directors have declared an interim dividend of 18 cents per share, fully imputed in New Zealand.
Outlook
Freightways says the economic climate “will be a tougher one to operate in in the near term” but the company remains positive about the resilience of its business model, given its diversification across a number of segments and geographies.
“Volumes have remained stable in Australia and New Zealand but will continue to be subject to the economic environment in both countries.
“Labour markets have eased, particularly in NZ and we expect labour rate increases to normalise in FY25.
“We expect to continue to grow utilisation at the Ruakura facility through FY24 such that we are breakeven by Q1 FY25 and generate positive returns from then on.”
Capital expenditure for FY24 is forecast to be lower than initially budgeted at $35m for the year.
“The group will continue to consider acquisition opportunities that are complementary to our existing operations and capabilities and are considered accretive to our shareholders,” it says.
Freightways share price is currently around $8.61 per share.
