Mainfreight managing director Don Braid said the company had expected to do better in FY24. Photo / Supplied
Mainfreight managing director Don Braid said the company had expected to do better in FY24. Photo / Supplied
Global logistics company Mainfreight has posted a 33 per cent fall in profit before tax to $395.4 million for FY24 as freight volumes and international sea and air freight rates returned to earth.
Revenue was down 17 per cent at $4.72 billion compared to FY23.
Mainfreight managing director Don Braid said results for the 12 months ended March 31 were broadly in line with the company’s expectations and were signalled at the half year.
Trading had improved in the second half, especially across the Australasian businesses. Weakness in trading continued in Asia, Europe and the US, he said.
The final dividend for the year will be 87c per share, payable on July 19.
“As was well signalled, we embarked on this financial year well aware of the challenges and the expected deterioration in international freight rates and domestic freight tonnage,” Braid said.
“It has been and remains a demanding operating environment when compared to the prior two years.
Net profit before abnormals was $277.9m, down 35 per cent.
Adjusted for foreign exchange impact, group revenue was down 18 per cent.
There was an abnormal accounting (non-cash) adjustment of $69m relating to the tax treatment of depreciation on New Zealand-owned property.
Operating cash flows declined from $757m to $505m, reflecting the reduced profit, the company said.
Mainfreight offices at Railway Lane, Ōtāhuhu. The global logistics company says it is confident of medium to long-term growth. Photo / Alex Burton
Total air freight kilos were up 4.5 per cent and total containers lifted 4.7 per cent. Domestic transport tonnes were down 6.2 per cent and total warehouse orders collected were up 12.3 per cent.
“We have grown a larger business, attracted more customers and increased our operational capacity. However, our ability to convert this to more meaningful long-term profitability during this past year has been disappointing,” Braid said.
“No matter the prior year’s record performance, we should have performed better.”
Due to many branches contributing less profit than in FY23, the company’s discretionary bonus to staff would decrease 68 per cent to $25m compared to last year.
That was $55m down on last year’s payment to team members who qualified.
Group operating cash flows were $505m, down from $757m the prior year, reflecting decreased profitability, and working capital movements.
Current debt facilities totalled $501m, of which $148m was drawn. Net funds at March 31 were $22m to net $123m last year. Gearing ratios were still satisfactory, the company said.
Net capital expenditure was $254m, with expenditure for property accounting for $128m, warehousing racking and fit-out costs of $59m and plant, equipment, and software of $67m.
“We continue to invest in our network and the infrastructure associated with it. We expect capital expenditure through to the end of 2026 will total $509m, of which $390m relates to property, racking and fit-out costs,” Braid said.
This was allocated between regions as: NZ $159m; Australia $104m; Americas $83m; Europe and Asia $44m.
‘Demanding’ environment
Braid said the operating environment was demanding.
“Despite these challenges, the peak freight congestion of 2022-2023 has provided a period of significant growth, new customers, and improvements for our business.
“The results of 2024 surpass the results of 2021 by a significant quantum.
“Supply chain management has emerged as a critical strategic decision among our customers. They now seek greater resilience and are diversifying their supply chains.
“Our established network across 27 countries offers good capability across the varying supply chain requirements. We continue to attract new customers across our network and are confident of ongoing growth.
“We continue to invest in land and buildings, including leased facilities where required. The total capital expenditure is NZ$255 million through to the end of 2025.
“Our network expansion will continue to be carefully managed as we look to improving returns rather than expansion for the sake of it.”
Braid said the company was confident of its medium to long-term growth opportunities.
The company said Graeme Illing, New Zealand financial controller, was appointed chief financial officer. He started with Mainfreight in 2000 and had been transitioning to the role.
Illing succeeds Tim Williams, CFO for 30 years, who retires at the end of next month.
