KEY POINTS:
Express delivery company Freightways has shrugged off escalating fuel costs and an unexpected hike in road user charges to post a 5 per cent rise in earnings.
Operating revenue for the year ending June 30 was $323.9 million, up 14 per cent on the previous year, but rising costs restrained growth in net profit after tax to $32.3 million, up from $30.8 million.
The company expects the strong showing to continue in the near term - its 5-year compounding average annual revenue growth was 11 per cent - but would depend on the performance of the wider New Zealand economy.
Managing director Dean Bracewell said market conditions were "as challenging today as it has been in recent times". "It hasn't been easy out there. But we've come through with an improved result, and we're very, very happy with that."
Freightways' express package division - the major contributor of the company's revenue and earnings - has been hit hard by escalating fuel costs.
Bracewell said the business was also slugged by between $500,000 and $1 million by the Government's decision to increase road user charges in July.
The total amount was small in relation to the overall business, but the swiftness of its introduction meant it could not recover the additional costs immediately, he said.
But earnings for the division, which includes New Zealand Couriers and SUB60, were still slightly above what was achieved in the previous 12 months, he said.
The company's DX Mail, which operates in the domestic postal services market, grew its overall volume and revenue significantly, but struggled with earnings in the second half due to a changing business mix that affected margins.
Bracewell said some traditional business - such as travel tickets and property conveyancing - was being lost to email but that was offset by increased postal volumes.
DX Mail also incurred additional expenditure in adjusting its operations to comply with the new pricing-in-proportion regime introduced by NZ Post in March.
The information management division, which now contributes around 15 per cent of Freightways' total revenue, was "an emerging growth opportunity", said Bracewell, with growth strong in New Zealand and Australia.
Bracewell said the core express package division was expected to continue performing soundly, although month-on-month volume fluctuations made it difficult to forecast near term performance.
Business mail was expected to grow, as were the information management businesses in New Zealand and Australia.
A fully imputed final dividend of 9.25 cents per share was declar-ed.
Freightways shares closed at $3.30, up 11c.
PROFIT UP
Year to June 30
Operating revenue
2008 - $323.9m
2007 - $283.4m
Ebitda
2008 - $68.5m
2007 - $62.9m
Net profit
2008 - $32.3m
2007 - $30.8m
Final dividend
2008 - 9.25cps
2007 - 9cps
