Mainfreight powering towards global status

Analysts say Mainfreight is performing ahead of expectations despite yesterday's 19c dip in its share price. Picture / Sarah Ivey

Listed transport firm Mainfreight, which reported a surge in profits yesterday, says it is making progress with its plans to expand into Europe and South America.

The firm already has divisions on both sides of the Tasman, in Asia and the United States.

Additional businesses in Latin America and Europe would see the group practically spanning the globe.

"We'll see what's available and if something is available we'll get ourselves a foothold in each of those locations," said Mainfreight managing director Don Braid.

"We want to be a global business, so it's probably the last big step for us and once we're there we can intensify the network to truly bring Mainfreight to global status."

Forsyth Barr analyst Rob Mercer said the company would be looking for sensible, appropriately priced acquisitions.

That, he said, had been the company's strategy during past overseas expansions.

Mainfreight's net surplus before abnormals of $34.6 million for the nine months to December was a 27.1 per cent increase on the earlier period. Total revenue rose 20.1 per cent to $1.01 billion.

Mainfreight's share price closed down 19c at $8.20, despite the firm's indications that trading improvements would continue to the end of its financial year.

Analysts said the result was strong, and not to read too much into the fall in the stock's value.

Goldman Sachs analyst Marcus Curley said the result was slightly ahead of his expectations, and the fact the NZX-50 index fell 0.60 per cent yesterday needed to be taken into account.

"[Mainfreight] stock has had a pretty strong run over the last three months and is probably taking a breather more than anything," Curley said.

Mercer said Mainfreight had been one of the best performing NZX-listed firms through the downturn.

"They've certainly been gaining market share in Australasia - both in New Zealand and Australia - and they've been securing very good revenue growth in their international businesses," Mercer said.

Ebitda (earnings before interest, taxation, depreciation and amortisation) was up 17.9 per cent to $67 million.

Included in the result was a nearly $8 million bonus accrual, excluded from the year before's result because of suspension of bonus payments.

"We've performed pretty well in every market," said Braid. "I think that reflects the depth and potential we've got in our offshore businesses."

Braid said 70 per cent of Mainfreight's revenue was now earned overseas.

Ebitda in Mainfreight's New Zealand domestic division rose 7.3 per cent to $30.7 million, while sales increased 8.7 per cent to $219.5 million.

The company said revenue increased 16.6 per cent to $91.2 million in its New Zealand international division as it continued to gain market share in the import and export sea and air freight markets.

Extreme weather conditions across the Tasman had a short-term impact on freight movement in Mainfreight's Australian domestic division, particularly in Queensland.

But freight volumes were expected to increase as repairs and stock replacement - resulting from flood and cyclone damage - took place.

Mainfreight said progress was continuing on its expansion plans for South America and Europe.