KEY POINTS:
Freight company Freightways has reported half-year trading revenue of $144.3 million, up 11 per cent on the same period a year ago.
The net surplus before income tax for the six months to December 31 was almost unchanged at $21.6 million, while first half net profit was up 1 per cent to $13.7m.
The company today announced a fully imputed interim dividend of 9 cents per share, compared to 8.5c previously.
Chairman Wayne Boyd and managing director Dean Bracewell said the business environment during the six months was "challenging".
The growth of Freightways' core express package businesses would continue to be influenced by the performance of New Zealand's domestic economy, they said.
"In more recent times we have seen some improving activity amongst our existing customer base that had in the previous 18 months been showing signs of slowing down."
Business mail operation DX Mail was expected to continue to contribute growth as it realised the opportunities both in its market and as a result of its recent acquisition of the franchisor rights of the Pete's Post mail delivery business.
Information management businesses were also expected to continue to grow and as such Freightways would continue to invest in their development.
Cost pressures were expected to moderate in the near term, particularly in regard to fuel, although the cost of fuel was still well above historic levels.
Acquisitions and alliance opportunities would continue to be investigated in the three market segments where Freightways had proven capability.
"The business environment, particularly in regard to the express package businesses, is expected to remain challenging in the near term," Mr Boyd and Mr Bracewell said.
In the medium to longer term, and subject to business factors beyond its control, Freightways remained well positioned in all aspects of its business.
The express package businesses contributed most of Freightways' revenue and earnings. Results from brands New Zealand Couriers, PostHaste Couriers, Castle Parcels, SUB60, Kiwi Express and Security Express were sound, Mr Boyd and Mr Bracewell said.
Revenue growth had helped offset the higher cost of doing business during the period, while overall the express package consolidated earnings result was on par with the prior half year, despite lighter activity from existing customers.
A key initiative had been the initial implementation of a data service providing customers with access to real time service information.
Another important move was an agreement with Qantas to market its same day domestic freight capacity on the network of services it operated in this country.
While New Zealand's same day market was relatively small, the new service further extended Freightways' existing suite of express package services, Mr Boyd and Mr Bracewell said.
DX Mail had continued to build its presence in its targeted business mail niche of the postal services market, with revenue and earnings increasing.
Secure data and document storage and destruction services in this country were showing sound growth as demand for the professional management of business information continued to increase.
Freightways had recently bought the second Wellington site that housed one of its existing facilities and also provided land for expansion. When developed, the expansion land would more than double storage capacity at this site.
In Australia, where Freightways acquisition DataBank provided data storage services in Sydney and Melbourne, the quality of revenue and earnings growth was good.
That had resulted in the expansion of DataBank into the Brisbane market with a start-up operation that leveraged existing data storage customers previously outsourced to an agent.
Freightways shares opened 5c higher at $4.70 today, having hit a year high of $4.95 last month from a year low of $3.20 last February.
- NZPA
