Mainfreight forecasts confronting years ahead for the wider economy

Global logistics company Mainfreight has signalled a “challenging” first six months of FY24 trading, with chairman Bruce Plested warning of a “difficult and weak” macroeconomic environment over the next few years.

The cautionary tone comes in the NZX-listed transport operator’s FY2023 annual report. Mainfreight will report its half-year earnings in November.

The forecasts follow Mainfreight’s 13th year of increased revenue growth and profitability, fuelled by increased freight costs. It posted FY23 sales revenue of $5.68 billion, up 8.8 per cent on the previous year and a 20 per cent improvement in before-tax profit to $587.4m. Net profit after tax was also 20 per cent up at $426.5m.

Plested said Mainfreight had generated ever-increasing revenue and profits in the past two years due to a very volatile and difficult congested freight network.

“This volatility has grown our business and provided opportunity not experienced before in our lifetime.

“We will navigate a difficult and weak macroeconomic environment over the next few years. Therefore we may well have a period of softening growth in comparison. This will not deter us, it will make us stronger.....”

Managing director Don Braid echoed the economic sentiment.

“Macroeconomic conditions will continue to deteriorate and high inflation will be a feature in the short term, of that we are sure.....

“Trading, post result, has continued to show a weakness in volumes and activity. Whilst management of overhead cost structures and the implementation of freight rate reviews have been successful, it is expected to be a challenging first six months of trading.”

Braid said Mainfreight remained confident of its medium to long-term growth prospects. Logistics and supply chains were expected to change.

He noted Mainfreight’s employee numbers increased by 918 to 11,311, including owner-drivers, in the past two years.

The increase was a result of growth and large volumes of freight moved.

Recruitment had reduced significantly over the past three months across all regions, reflecting the slowing economy.

Plested, as is his tradition, used the annual report to comment on societal issues, highlighting Mainfreight’s climate change and sustainability measures.

He suggested that if more businesses with large roof areas followed its example “they would be making a significant contribution to not wasting a natural resource”.

Mainfreight’s founder noted the New Zealand and Australian operations had collected rainwater for truck washing, irrigation and toilet flushing for 35 years.

“Now we are in the process of adding drinking water, showering and cafeteria use to our existing facilities and making it mandatory for all new builds in Australia, New Zealand, Europe and the USA.

“Not only does this contribute to our water security we are also reducing the flow of stormwater disposal into the sea.”

Plested said for the past five years all new build facilities had been fitted with solar panels to charge electric forklifts and a growing number of electric trucks and cars.”

He said 20 years ago, Auckland’s Hauraki Gulf “had frogs on the foreshore in places, tuatua shellfish, mussels, scallops and crayfish”.

“Now these things are described as “functionally extinct” in many areas. Could it be that this is the result of global warming as distinct from fishing methods?”

Plested also turned his attention to education, which he said was “the enemy of poverty.

“Schools, pupils, parents, families and neighbourhoods must find ways to get our children back to attending pre-school, school, university and technical institutes.

“Perhaps never has there been a time when the expression ‘it takes a village to raise a child’ has been more pertinent. Without education we are allowing a generation of young people to not gain enough learning to become useful contributing members of our society.

“Education is the only means by which we can remain a first-world country.”