Freightways revenue up 29%, resumes dividend payments

Freightways chief executive Mark Troughear. Photo / Supplied

Express package and information management company Freightways said a decline in office activity during Covid-19 lockdowns was a factor in the 25 per cent fall in its first-half net profit to $21.9 million.

The company said a 29 per cent lift in revenue was driven by the inclusion of Big Chill in the group's result as well as strong growth in courier volumes in New Zealand and medical waste volumes in Australia.

The result makes a provision for a higher estimated future payment for the future performance of Big Chill of $19.2m in 2023 based on higher-than-expected growth of this business.

Freightways bought Big Chill Distribution - which operates a fleet of more than 200 refrigerated trucks and trailers - for $117m in 2019.

Chief executive Mark Troughear said Freightways' businesses were still feeling the effects of lockdowns in New Zealand and Australia and said it showed the resilience of the company.

Freightways returned to paying dividends with a 15.5 cent interim payout, up from 15c a year earlier.

The company did not pay a final dividend due to uncertainty surrounding the pandemic.

The company's operating profit was steady at $48m from $48.9m in the previous corresponding period.

"While the harshest level 4 lockdowns present significant efficiency, resourcing and financial challenges, outside of level 4 we have seen several new dynamics establish themselves – a larger market for courier services driven heavily by eCommerce and a higher awareness and demand for medical waste disposal," the company said.

"On the negative side, we have had to adapt to lower levels of office activity among our customers in our information management businesses, which we have partially offset by repurposing vehicles and re-training people to provide alternate services."

Information management includes document destruction and storage.

Covid-19 global had accelerated a number of trends that were already evident before the start of the pandemic, the company said.

Among them was a faster adoption of online shopping that positively impacts volume for
Freightways' express package businesses.

"At the same time, with a number of information management's customers having employees working from home and using less paper, some of the information management activities continue to recover at a slower pace," it said.

Freightways said the risk of a slower recovery was partially mitigated by the development of new service lines and costs management.

The risk of a resurgence of Covid-19 in New Zealand or Australia created a continued level of uncertainty, although Freightways' businesses were now well prepared to operate efficiently in different levels of lockdown, it said.

During the period an additional $0.9m was received from the Australian Government in relation to the its JobKeeper subsidy.

Looking ahead, Freightways said that in its express package business, existing volumes would be supplemented by market share gains and the growth of eCommerce, while business-to-business volume would be influenced by macro-economic activity.

In information management, revenue streams would be driven by the number of people returning to office environments.

Freightways noted this could be lower than pre-Covid-19 levels.