Freightways has reported net profit after tax of $63.4 million, up 1.9% for its full year result.
Revenue was up 6% to $615.7m and earnings before interest, tax and amortisation (EBITA) up 2.9% to $99.1m for the 12 months to June 30.
It was a “year of two halves” for the company with the first half “characterised by solid organic growth” but then turned to “flat organic growth as the New Zealand economy slowed” in the second half.
“Despite these headwinds, Freightways expects to continue to demonstrate its long-held disciplines in terms of managing margins, investing appropriately for growth and exploring new service opportunities,” the company says.
“The results were pleasing for the year when these factors, alongside material contractor earnings and wage increases, were also taken into account.”
The express package and business mail division (EP&BM) “delivered a sound full year result”.
The division’s operating revenue was up 5.6% to $453m and EBITA up 6.3% to $72.2m.
This includes New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, SUB60, Security Express, Kiwi Express, Stuck, Pass The Parcel, DX Mail and Dataprint.
The company says the EP&BM division has “positioned itself well to avoid the pitfalls of many express package operators that appear to have thrown themselves into residential deliveries at what we view as unsustainably low margins”.
“Freightways is confident that its brands will be able to provide higher quality delivery services to residential areas, sustainable courier remuneration and ultimately generate returns from the growing B2C market.
“Freightways has observed a slowdown in New Zealand in terms of same-customer trade over the second half of 2019 in its express package businesses. Despite this headwind, management remains optimistic that pricing and efficiency initiatives in express package and Freightways’ diversification strategy in information management will provide growth opportunities in 2020. Freightways is once again targeting year-on-year earnings growth in 2020.
“Within the EP&BM division, indications are that organic volume growth will be lower in 2020 than it was in 2019. There will be a strong focus on maintaining and improving margins, along with improving visibility to customers and receivers for express package deliveries. Focus on continuing to build courier remuneration through intensification of their runs and improved residential delivery pricing will also be a priority.
“Overall capital expenditure for the 2020 financial year is expected to be between $22-24 million. Operating cash flows are expected to remain strong throughout 2020.
“Strategic growth opportunities, including acquisitions and alliances that are synergistic or complementary to our existing capabilities, will be executed where they make commercial sense.”
