Freightways is reporting a rise in revenue and earnings for the first quarter of the 2024 financial year but warns tougher than expected economic conditions will have an impact on full-year results.
The dual-listed transport, logistics and express package firm revealed the trading updates at its annual shareholders meeting in Auckland on October 26.
The group’s unaudited Q1 consolidated performance saw $298 million in revenue, up 25.5% compared to the same period last year.
EBITDA was up 11.9% for the period to $55.4m while net profit after tax was down 4.7% to $18.4m.
Chief executive Mark Troughear says the firm has experienced a continuation of same-customer decline in volumes in New Zealand, and the start of a similar slowdown in same-customer activity in Australia.
However, both markets have seen new business gains “which are partially mitigating the underlying poor economic conditions,” he says.
The company is also seeing easing of the labour market with more applicants per role and expects a lower rate of wage inflation from the back end of FY24 when new pay rates are applied.
This follows an extended period where positions were difficult to fill and saw the firm increase the use of temporary workers at higher cost in order to maintain service levels.
In August, Freightways reported its full-year result which saw net profit after tax up 7.3% to $75.3 million for the 12 months to June 30.
This was marked by strong growth in its Australian operations but a more “sluggish” environment in New Zealand.
Operating revenue for the financial year was up 29% to $1.1 billion with its Australian businesses growing by 143%.
It paid a final dividend of 19 cents per share, bringing the total annual dividend to 37cps, stable on the prior year.
Freightways says growth in the Australian economy in FY23 helped deliver the solid performance alongside its recently acquired courier and express freight business, Allied Express, which lifted the overall group result.
In New Zealand, Freightways is looking forward to more activity out of its newly opened Ruakura temperature-controlled facility for its Big Chill operation. It’s targeting 50% utilisation by end of the financial year with Big Chill customers to be steadily be onboarded, Troughear says.
In terms of outlook, existing customers continue to trade approximately 5% below the previous period although new business has helped close some of that gap, he says.
“The economic environment seems to be worse than we were expecting.
“Whilst we will be trying to minimise its impact and adjust our cost base in a sustainable way, we now see a risk that EBITA will be at or below the level of last year,” Troughear says.
“We continue to assess a number of [merger and acquisition] opportunities for fit and value,” he adds.
