Freightways profit falls 2 per cent

Freightways managing director Dean Bracewell. Photo / Martin Sykes

Freightways reported a 33 per cent fall in full year net profit to $23.16 million, although when a $5.7m abnormal tax charge was excluded the result was down just 2 per cent from the previous year at $28.9m.

Revenue for the year to June 30 was down 3 per cent to $328.47m, although 2 per cent down when the previous year result was normalised, Freightways said today.

Second half revenue was 1 per cent above the normalised figure from a year ago, compared to the first half revenue which was 4 per cent below the year ago figure.

Freightways' performance in the second half of the year showed good improvement compared to a year earlier, chairman Wayne Boyd and managing director Dean Bracewell said today.

As a result the company had been able to declare a fully imputed 7c a share final dividend. That compares to 8.5c last year.

Boyd and Bracewell noted the company had yet to see a sustained, across-the-board improvement in all its businesses, indicating continuing market uncertainty and suggesting the impact on Freightways of an improving economy would continue to be gradual.

The tax charge was related to the Government's budget, which cut the corporate tax rate and removed tax deductibility on depreciation for buildings with a life of 50 years or more.

The changes resulted in the need for an increase in the deferred tax liability, so an abnormal charge to tax expense for the year ended June 2010 was needed, Freightways said.

Earnings before interest, tax, depreciation and amortisation (ebitda) at $63.7m were 2 per cent lower than normalised prior comparative period.

During the year the performance of the core express mail and business mail division - which contributes 80 per cent of revenue and 78 per cent of earnings - "gradually improved", the company said.

Operating full year revenue of $263.5m for the division was 4 per cent lower than the normalised figure from a year earlier, with second half revenue down 1 per cent, while the first half was down 7 per cent.

Full year ebitda of $48.9m was 5 per cent lower than the normalised year earlier figure, with the second half up 3 per cent.

Overall lower express package volumes from existing customers had meant lower revenue for the division than a year earlier, Freightways said.

The information management division reported operating revenue 9 per cent above the normalised figure for the year before at $66.2m, with ebitda 12 per cent up at $15.5m.

The company's trans-Tasman information management businesses had continued to show great resilience to the economic cycle, Freightways said.

The document destruction arm was initially severely affected by lower revenue from the sale of its recycled paper, but recycled paper prices later returned to the long run average.

That impact was largely offset by the growth and development of the document and data storage businesses and efficiency gains as the benefits associated with consolidating operations in a number of locations were realised.

- NZPA