Mainfreight profits surge 52pc

Photo / Sarah Ivey

Mainfreight, the trucking company whose shares have jumped by a third this year, reported a surge in first-half earnings as it managed to squeeze more profit from a moribund US economy and lifted returns in Asia.

Profit excluding one-time items rose 52 per cent to $16.5 million in the six months ended September 30, from $10.9 million a year earlier, the Auckland-based company said in a statement.

Sales rose 20 per cent to $645 million, or a gain of about 25 per cent excluding foreign exchange movements. Offshore sales now account for 70 per cent of Mainfreight's revenue, generating 50 per cent of earnings before interest, tax, depreciation and amortisation.

In the US, sales climbed 28 per cent and EBITDA surged 127 per cent to $6.73m, reflecting better third-quarter trading for both domestic and international freight. The US results were encouraging though still below expectations, managing director Don Braid said.

"Irrespective of media commentary, general trading conditions for our operations throughout the US continues to improve," Braid said.

Trading in October and November continued to show the improvement seen in the first half and margin management "remains a key focus for our teams throughout the U.S." Mainfreight shares fell 2 per cent to $7.25, paring their advance this year to about 33 per cent.

The shares are rated 'outperform' based on the consensus of six analyst recommendations compiled by Reuters.

The company will pay a first-half dividend of 9 cents a share on December 17, up 0.5 cent from a year earlier.

Business performance improved in most divisions, Braid said.

New Zealand domestic revenues increased 6.6 per cent to $137 million, while its NZ international division's sales rose 19 per cent to $57 million. International shipping and airfreight rates have increased, reflecting capacity shortages across international trade lanes he said.

Australian domestic sales revenue lifted 26 per cent to $104 million, and Australian international sales rose 26 per cent to $116 million.

Asia international sales revenue improved 59 per cent to $19 million as the company celebrated the 10th anniversary of its Shanghai branch.

Capital expenditure in the six months was $5.6 million, of which $1.35 million was property related.

"Property development expenditure is expected to increase during the next six months as building projects gather momentum," Braid said.