Mainfreight managing director Don Braid. Photo / Supplied
Mainfreight managing director Don Braid. Photo / Supplied
Global logistics group Mainfreight has weathered the Covid-19 storm, declaring an unchanged final dividend of 34 cents for the year ended March 31.
Reflecting its improved trading levels post Covid-19 shutdown, the company returned the $10.6 million wage subsidy it received in April on behalf of its 1,526 New Zealand staff.
Managing director Don Braid said the pandemic had had a significant impact and would continue to affect economic conditions as slower consumer demand sees freight volumes and supply chain activity contract.
"In the first seven weeks of trading in the 2021 financial year, Mainfreight has adapted as well as we would have expected to the erratic trading conditions," he said.
"We have been positively surprised at the levels of activity in New Zealand, Australia, Asia, and some parts of Europe, and this has been reflected in our estimated weekly profits in April and May.
"The Americas region has seen less activity than others and appears to be the one region that will take more time for us to see a significant level of recovery."
Mainfreight shares rose 1.9 per cent to $36.70 this morning, trimming their loss so far this year to 14 per cent. The dividend will be paid on July 17 to shareholders registered on July 10.
The company, reporting under the NZ IFRS 16 standard for the first full year, said earnings before interest, tax, depreciation, amortisation, abnormal items and lease costs were at $399.3m, from operating revenue of $3.1 billion. The new standard requires companies to recognise assets and liabilities for all leases of 12 months or more.
On that basis earnings were at 158.1 cents from net profit after abnormal items of $159.2m. After accounting for the impact of foreign exchange, on a comparable basis revenue was up 3.6 per cent, ebitda was up 8.6 per cent and net profit, before abnormal items, was up 9.9 per cent.
Those abnormal items include a tax gain of $14.7m on building depreciation, one-off redundancy costs in Europe of $526,000, and impairment costs of $3m related to the write-off of the European Wim Bosman brand.
Braid said the results were pleasing considering the ongoing supply chain disruptions brought about by the Covid-19 pandemic.
In light of those conditions, the company has maintained its hiring freeze, has eliminated casual labour and has deferred capex of $120m.
Directors fees and Braid's remuneration, which was disclosed last year at about $950,000, have also been halved.
Debt facility
Mainfreight said its current debt facilities total $499m, of which $235m remained undrawn while gearing ratios remained consistent at 14 per cent.
Net capex totaled $155m for the period, of which land and buildings accounted for $111.7m, plant and equipment $26.6m and IT at $16.7m.
Of its remaining planned capex of about $80m, the company said it would continue with its new transport facilities for Mount Maunganui, Levin, Blenheim, Gore and Oamaru, with additional warehousing sites being considered for Auckland.
Braid said the New Zealand business, which contributed ebitda of $139.8m for the year, continues to expand, with an expectation that air transport volumes will increase.
"We are seeing increased enquiry for our warehousing solutions and significant air freight volumes are being moved via air charters to and from Asia and the USA."
The Australian business, which contributed ebitda of just under $100m, wasn't unduly impacted by the country's partial lockdown, with freight volumes continuing at "more or less" normal trading levels.
Sales levels for the seven-week lockdown period increased 13 per cent year-on-year with profit before tax up A$4m ($4.2m) to A$6m for the period.
In Europe, the transport division benefited from better margins across cross-dock and vehicle management while warehousing also performed well. During the year the company completed the phase 2 development of a further 26,000 square metres to its Zaltbommel facility in the Netherlands.
The European impact of Covid-19 saw revenue decline 5 per cent over the past seven weeks, with profits down by about one million euro.
Braid said that as European countries begin to reopen, Mainfreight was seeing freight volumes improve and warehousing activity increase.
Asia disappointing
Mainfreight's Asian business had a disappointing finish to the year, with EBITDA at $5.4m, as US import tariffs reduced volumes from China and activity from Hong Kong decreased due to civil unrest.
"The pandemic coincided with the usual Chinese New Year shut down of trade, and affected freight volume to and from all regions during February and March. While production in China has returned, the inability of importers to receive product under the varying levels of lockdown within our other regions, has seen fluctuating freight tonnage."
Braid said development of the company's Southeast Asian operations remains key to diversifying Mainfreight's Asian business and reducing reliance on China trade alone.
While US EBITDA was up at US$39.1m ($63m), this was impacted by a significant slowdown in transport freight volumes as the country moved into full lockdown in its response to Covid-19, although that was offset by stronger air freight volumes.
Forsyth Barr head of research Andy Bowley said that while profitability could be lower in the current financial year, he expected Mainfreight would "take advantage of the downturn and enhance its competitive position."
