KEY POINTS:
Higher interest costs have kept Freightways' net profit for the September quarter on a par with a year ago, despite a 10 per cent lift in operating revenues.
For the three months ended September 30, operating revenues were $77.3 million, with net profit after tax (Npat) at $7.7 million, the company reported today.
Earnings before interest and tax were up 4 per cent to $14.5 million.
Freightways said interest rates had been steadily increasing at the same time as it had increased its level of debt to fund recent capacity and growth related investment decisions.
While a well established interest rate hedging strategy was in place to provide long term protection against adverse movements in interest rates, short term movements would have an impact on the cost of unhedged debt and consequently on Npat.
The domestic market had continued to be challenging, with activity in the core express package business similar to year ago, while the cost of doing business had increased, Freightways said.
Emerging businesses operating in business mail and information management markets had continued to enjoy strong year-on-year growth.
During the quarter Freightways completed the acquisition of Australian document destruction business Shred-X and subsequently the acquisition of the business of Document Destruction & Paper Recycling.
Those businesses had now been merged and synergy benefits were expected to have started from the middle of this month, the company said.
The core express package business was expected to continue to perform soundly, with growth influenced by the performance of the New Zealand marketplace.
Emerging growth operations in business mail and information management markets were expected to continue to grow and develop, Freightways said.
Potential acquisitions that complemented the company's capability would be explored, while all subsidiaries had capacity to grow.
Recent Australian acquisitions were important initiatives as the company continued to diversify and grow both geographically and further into the information management market.
Managing director Dean Bracewell told today's annual Freightways shareholder meeting in Auckland that capital investment of about $15 million would be spent during the 2008 financial year in areas that supported business growth.
That included the initial development of the company's recently acquired information management site in Wellington.
Freightways shares were down 5c to $3.90 in late-morning trade today, after having been as high as $4.95 at the beginning of the year.
- NZPA
