Freightways has posted a net profit of $49.6 million, up 4.8% for the 12 months to June 30.
The result included an extra provision for the final payment made for the acquisition of transport operator Big Chill.
Freightways paid 80% ($115m) of the value of the company upfront in April 2020 with a final payment due in August 2023.
Removing the non-trading impact of the Big Chill final payment, the full year result represents an increase of almost 30% from last year, to $72.7m.
Total revenue was up 27% to $800.5m and a final dividend was reintroduced at 18 cents per share. Last year, the board chose not to declare a final dividend due to the uncertainty in both the New Zealand and Australian markets.
In a joint statement on the result, chairman Mark Verbiest and chief executive Mark Troughear say last year was about resolving the many and varied challenges posed by COVID-19 and this year focused on moving forward.
“This year, we continued to set new expectations for our customers; lift income and boost career aspirations for our people; deliver healthy returns for our investors and made plans to further reduce our emissions,” they say.
The company grew by 350 people through the acquisition of Big Chill and despite the growing workforce, the company managed to reduce the number of injuries.
“We did all of that by encouraging everyone who works here to take individual responsibility for making things better and rewarding them for that, by doing deals that make sense, by thinking commercially, and by working as a family that cares for each other and supports safety, security and wellbeing within our businesses.
“We marked a year of owning Big Chill, and we are very happy with their progress. They are a clear example of a strongly positioned business which is focussed on meeting the needs of their customers, exploring new ways to generate value and improve earnings.
“At acquisition, Big Chill were a quality, temperature-controlled, express business. Since then, they have broadened activities to include coolstore-3PL capabilities and we have plans for this to continue as they add new value-adding services in the years ahead.
“Big Chill’s progress is echoed across the group. Our Express Package brands such as New Zealand Couriers and Post Haste have evolved from being leading business-to-business couriers, to brands that now include profitable business-to-consumer deliveries.
“Our Med-X business is shifting from document destruction to waste renewal by taking on high-value recycling opportunities. Messenger Services are moving from a pure- play point to point service to one that builds deeper relationships through dedicated services,” they say.
Looking ahead, the company says there is opportunity for growth across the courier businesses as e-commerce continues to grow.
This includes the emergence of new consumer trends such as people wanting more direct access to fresh food.
“There’s plenty of upside too in waste renewal. Beyond document destruction and medical waste, we’re already making good gains in collecting materials to divert them from landfill.”
Pricing for Effort (PFE)
The company says its Pricing for Effort (PFE) initiative continues to build value for its contractors by better remunerating them for the effort required in completing residential deliveries.
Last year it achieved a PFE rate of 73c per item and this year lifted that to $1.32 per item.
“Couple that gain with increases in volumes and PFE has made a noticeable difference for our people. This year, average remuneration for our couriers improved by 8%. In particular, our residential contractors have experienced a healthy increase in earnings,” they say.
The company has also seen a 10% reduction in turnover in its courier fleet. There has also been an increase in the number of applicants applying to join the fleet.
“Our goal now is to continue tackling PFE opportunities to keep improving contractor and company earnings. Residential deliveries are just one of a range of categories that have not been priced properly. There’s no doubt in our minds, for example, that local pricing also needs to move to a better place.
“Customers are in essence paying the same rate for local delivery that they were paying 25 years ago. In that time, our cities have become much more congested and difficult to move around in.
“Our efforts to help resolve this have so far been absorbed by our brands. We’ve had to invest in satellite depots, for example, to try and keep inefficiencies for our couriers to a minimum. At some point, we need to step up, challenge the industry again and update pricing to reflect the true effort now required,” they say.
Emissions reduction
On top of its first ever sustainability report released last year, the company has developed a science-based target for emissions reduction which will see it targeting a 50% drop in emissions by 2035.
It aims to achieve this through maintaining a modern fleet and transitioning to EVs and alternative fuels as they become available. It has also actively pursued plastic recycling to reduce waste from its operations and is targeting a 70% reduction in the use of plastic packaging in the coming year.
In 2020, the company established an innovation hub, The Startery, to help commercialise ideas generated alongside the business-as-usual activities.
“The 30 ideas generated so far are an encouraging sign of the group’s ability to recognise and act on initiatives that could shape our future.”
Outlook
The company says it was a record year in terms of earnings and performances across the business but this can be influenced by economic conditions and lockdowns. “On that basis, we are not resting on our laurels,” they say.
The recent nationwide level 4 lockdown has seen activity levels “significantly impacted” across all the New Zealand businesses.
“However, experience from the lockdowns of last year suggests that as soon as alert levels are lowered from alert level 4 to alert level 3 or below, the express package businesses should recover quickly and tend to experience higher volumes than previously expected.
“Should the level 4 lockdown continue for an extended period we will continue to evaluate our cost base and other options available to us,” they say.
