Mainfreight sees more subdued trading conditions overseas

Mainfreight today said import volumes were not expected to improve until China’s reopening produced more consistent action. Photo / Supplied

Listed global logistics and transport company Mainfreight expects to deliver a “satisfactory” FY2023 result despite more subdued trading conditions in late December and into January.

In a market update, the Auckland-headquartered company said the softer conditions were noticeable in its US and Asia operations.

These conditions were reflected in reduced revenue and profit before tax levels of both regions due to a combination of lower international sea freight and airfreight volumes and rates.

“In the past month, domestic transportation in the USA has been less than satisfactory,” the update to the NZX said.

“Trading in New Zealand and Europe has been in line with the prior period. Australia has continued with increased profit and revenue performance.”

The update covers 43 weeks of trading and is based on April 1 2022 to December 31 2022 monthly financial statements, plus weekly financials for last month.

Total group revenue was up 17 per cent at $4.82 billion, compared to $4.13b the previous period.

Profit before tax was up 32 per cent at $490.2 million, compared to $372m.

The company said it had satisfactory year-to-date results, but a less than satisfactory contribution from the USA and Asia in the past 17 weeks.

“Freight reviews are in place across our domestic operations in all locations to address inflationary cost pressures and we continue to find new customer opportunities in each region. Organic growth amidst our network expansion remains our priority.

“We expect our financial year-end result to be satisfactory,” the company said.

Full year financial results to March 31 2023 would be released on May 25.

New Zealand trading was in line with the prior period.

Domestic transport volumes were subdued through Christmas compared to the highs of last year. Profit performance was further impacted by increased costs of new facilities in West Auckland and Whakatane.

Australia was the best performing region since the company’s half year report, second only to New Zealand year-to-date.

In Asia, freight volumes were lower than expected and freight rates ex-China since the half year result had combined to deliver a disappointing performance in the past 17 weeks, the company said.

Freight rate reductions had stabilised and the reopening of China after Covid restrictions had resulted in improved forward bookings.

South East Asia development continued satisfactorily, and the company’s plans to start in India were on track for an opening later this year.

In Europe, trading across all three divisions - transport, warehousing and air and ocean - were satisfactory year-to-date.

The Americas were the poorest performing region post-half year result but performance year-to-date continued to exceed that of the year prior, the company said.

Export volumes were still satisfactory but import volumes were not expected to improve until China’s reopening produced more consistent volumes.