Mainfreight makes plans for aggressive drive overseas

Don Braid says Mainfreight is eyeing the US, Malaysia, Thailand, Singapore and China. Picture / Glenn Jeffrey

New Zealand-owned transport firm Mainfreight has detailed an aggressive push overseas, saying it expects offshore sectors will become its main source of revenue soon and overtake growth from domestic operations.

Group managing director Don Braid said at the firm's annual meeting yesterday that it expected New Zealand to become a much smaller part of its business as it pursued foreign opportunities.

"The levels of profitability we have achieved in New Zealand, with a mere population of 4 million people, are now ready to be replicated in countries with populations exceeding 20 million," said Braid. The company planned to have identified and completed successful acquisitions in Australia and the US "for the right fit and price" by next year.

"We have plenty of capacity for acquisitions and good gearing."

The company planned to launch its own brand in the retail freight forwarding market in the United States - and operate it alongside its wholesale freight forwarding business Carotrans, which looks after freight for some of Mainfreight's competitors.

It was also building a new warehousing facility in Sydney in partnership with Macquarie Goodman.

Mainfreight planned to have six or more profitable operations in north-east Asia by 2007 and was pursuing partnerships - rather than acquisitions - in Malaysia, Thailand, Singapore and China. The company already had freight-forwarding operations in those countries.

"You need to be very prudent as to how you do business in Asia - the banking system is different, the tax system is different, you need to have the support of the locals to understand the style of business in Asia, versus what you can do in Australia and New Zealand," said Braid.

Although Mainfreight was keen to develop its overseas business, it also needed to be patient in acquisition process. "We believe there are multiples that are being paid for businesses that are too high in our sector. There is a lot of private equity money floating around, which is not necessarily healthy when you are looking to acquire businesses."

Back home, Mainfreight said it continued to be concerned about the provision of rail services, which remained restricted as Toll struggled to reach an agreement with the Government's On Track over line fees. "If we can get better services with Toll, that would improve the movement of freight around New Zealand. I would like to see those negotiations quicken."

Shares in Mainfreight closed down 1c at $5.94. Mainfreight reported a net profit of $29 million for this financial year- up 114 per cent on 2005.