Freightways, New Zealand’s leading domestic express operator, has made a strong start to the2012-13 financial year with double-digit growth for Q1 profits and higher margins.
The company said today that its revenues increased by 8% to NZ$101 million (€64m) in the threemonths ending September 2012. Profits outpaced this growth, with earnings before interest, tax,depreciation and amortisation (EBITDA) up 12% at NZ$18.7 million (€11.8m), earnings beforeinterest, tax and amortisation (EBITA) 11% higher at NZ$15.7 million (€10m), and net profits rising14% to NZ$9.2 million (€5.8m).
“Our first quarter performance, achieved in a low growth environment, demonstrates the overallresilience of Freightways and the success of its strategic development. Past decisions to diversifyoperations geographically and by industry to increase the company’s growth opportunities areevident in this earnings result, as is Freightways’ ability to better withstand the inevitableperformance cycles of the broader economy and our specific markets,” commented managing directorDean Bracewell.
The express package & business mail division, which is the largest business area, increasedrevenues by 4% to NZ$76 million. Profits grew at comparable rates, with EBITDA of NZ$13 million andEBITA of NZ$12 million up by 5% and 2% respectively.
“Overall, express package volumes in the quarter were positive, which is a sound outcome giventhe very strong performance achieved in the previous year,” Bracewell said. The company alsoincreased its market share, he added. Letter volumes in the smaller DX Mail business declined,however.
Freightways has made ‘modest’ price increases across the entire division to help offset costincreases, particularly relating to road user charges and insurance but said the full benefit ofthese price increases would not be seen until the second quarter.
The fast-growing information management increased revenues by 23% to NZ$25 million, due largelyto acquisitions, and improved profits by more than a third.
Looking ahead, Bracewell said: “We expect to be operating in a slow growth environment for theforeseeable future. We are however mindful that any further deterioration in the global economywill inevitably influence the markets that we operate in. Within this environment, we expect ourexpress package volumes to remain sound, with growth in these volumes being primarily determined bythe performance of our existing customers.”
But he warned: “Letters volume in our DX Mail business will remain under pressure. Ourcompetitor, NZ Post, remains the owner and operator of New Zealand’s wholesale postal deliverynetwork. Freightways is dependent on access to this network for parts of its mail service and haschallenged the pricing model of our access for some time. It is expected that the future terms ofaccess to the NZ Post network, for those letters that we don’t deliver ourselves, will be resolvedin the near future. This will enable increased certainty for the growth and development of thisbusiness.”
