Freightways records 28 per cent growth in profit

Freightways Ltd today reported a net profit of $27 million in the June year -- up 28 per cent on last year.

Earnings before interest, tax and amortisation (EBITA) were $50.5m, up 24 per cent.

Freightways will pay a fully imputed final dividend of 8.5 cents per share on September 30 compared with 6.9cps last year.

The company said that all subsidiaries had performed well, with demand for services continuing to grow.

Consolidated operating revenue for the year rose 9 per cent to $233.7m and consolidated net profit after tax and before amortisation (npata) was $27m (up 28 per cent)

The final dividend payout of $10.7m bought the full year payout to $20.2 million (or 16cps -- fully imputed), 26 per cent higher than the previous corresponding period.

Cash generated from operations before interest and tax was $54.9m (48.2m previously).

Freightways said its core express package business contributes the majority of revenue and earnings. Its brands -- New Zealand Couriers, Post Haste Couriers, Castle Parcels, SUB60 and Security Express -- all achieved strong growth over the prior year.

A favourable domestic economy, continuing growth in demand for the time sensitive delivery of packages and modest pricing and market share gains were the primary drivers of revenue growth.

Growing volumes, a focus on business mix, margin integrity and cost management all contributed to efficiencies and productivity gains, the company said.

Freightway said incremental investment in network capacity to accommodate future growth resulted in branch relocations to larger facilities in Christchurch, Auckland's North Harbour and a number of other smaller regional locations.

During the year, Freightways acquired a small Wellington based point-to-point courier business, which merged with SUB60 in March 2005.

The company also established a working relationship with Mainfreight, enabling services to both companies' customers.

Low revenue per mail item and the high cost components associated with mail delivery will in the near term result in DX Mail's contribution being relatively modest in the perspective of Freightways' total earnings.

Freightways said it had also leased a large Convair 5800 during 2005, which provides additional capacity and reduced flying times on the main trunk route between Auckland and Christchurch.

It said the annualised benefit of $0.5 million arising from a refinancing to replace relatively expensive subordinated debt with normal commercial bank facilities will flow from 1 July 2005.

"At the same time, additional headroom of $22 million negotiated to enable Freightways to continue to explore and develop stepped growth opportunities," managing director Dean Bracewell said.

At 11am, Freightways shares were down 3c at 329.

- NZPA