Handbrake pulled on Freightways

Growth at courier company Freightways has slowed due to a less buoyant economy and higher fuel prices, and it is expected to slow further in the short term.

Freightways reported a rise in full-year earnings yesterday, but said it expected short-term growth to be stifled by a downturn in the economy and continued rise in fuel prices.

The company yesterday delivered profit growth of 11 per cent for the year ended June 30, driven by price rises of 4 per cent to offset the escalating cost of fuel, market share gains in its core business and new business for information management.

Net profit jumped 9 per cent to $29.3 million, operating revenue rose 10 per cent to $257 million and earnings before interest, tax and before amortisation (ebitda) rose 6 per cent to $53.4 millon.

Revenue growth in its core businesses - express package services - was around 10 per cent in the past year, down from the 18 per cent average annual growth over the five preceding years, said Freightways managing director Dean Bracewell.

The express package services, made up of NZ Couriers, Post Haste Couriers, Castle Parcels, SUB60 and Security Express, provides more than 80 per cent of total revenue.

"We are very focused on our growth strategy in our express package.We have had labour costs go up, through investing in people and facilities and are and well positioned to grow."

Bracewell said he saw "no signs" of new competitors in the New Zealand market.

Shares in Freightways closed down 14 cents at $3.68.

To offset downturn in the express package market, Freightways is "investigating closely" the possibilities of acquisitions in Australia, where the players are Australia Post, Australian Air Express, T & T, and Toll.

Freightways' recent purchase of information management company Databank in Australia - which covers 20 per cent of the market - would be used as a platform to develop all sections of the business in there.

"Once we understand and are operating in Australia, it will be easier for us to make a decision as to whether we do or not go into the express package market," Bracewell said.

The company was well positioned for strong growth when the domestic economy lifted he did not expect that to happen in the short-term.

"We have seen no evidence whatsoever that it [the economy] will be any less challenging but will continue to invest in people, infrastructure and customer service."

The company was not looking to diversify outside of express package, business mail and information management, he said.