New Zealand express delivery group Freightways Limited has announced record revenue of NZ$479 million for the financial year ended 30 June 2015, an improvement of 11% on the previous year, with growth across its business divisions.
This yielded net profit after tax and before amortisation (NPATA) of $51.3 million, when excluding non-recurring items, up 17%.
“The strong result was particularly encouraging, with all businesses in every region improving their performance through the successful implementation of organic growth strategies and the benefit of recent acquisitions,” said Freightways Managing Director, Dean Bracewell, in a statement.
The express package & business mail division, which operates a multi-brand strategy in the domestic market through New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, SUB60, Security Express, Kiwi Express, Stuck, Pass The Parcel, DX Mail and Dataprint, reported operating revenue of $360 million for the year, 8% higher than a year earlier.
EBITDA of $68 million and EBITA of $62 million were both 13% higher than a year earlier. These earnings amounts exclude $8 million of non-recurring charges associated with the write-down in the carrying value of the existing Convair fleet of aircraft and related parts and the transition from that fleet.
All businesses in this division reported improved revenue and earnings compared to the previous year, with increased volumes from existing customers, quality new business wins and improved pricing all contributing to the result.
Additionally, innovative new and expanded services across our businesses within this division realised new revenue and increased market share. Our larger businesses of New Zealand Couriers, Post Haste, Castle Parcels and NOW Couriers experienced particularly strong growth in the first three quarters of the year, whereas the final quarter experienced lower levels of growth.
The transition to a fleet of Boeing 737-400 aircraft from the existing Convair aircraft fleet in early 2016 is expected to provide increased capacity, faster sector speeds, savings in annual capital expenditure and operating costs and reduced carbon emissions per item of freight carried, Freightways underlined.
DX Mail continued to gain market share in the postal services market, increasing its postie delivery fleet in response to positive market demand. Dataprint also achieved a strong result through increased market share in its physical and digital transactional mailhouse services.
The information management division, which generates more than 25% of Group earnings, reported operating revenue for the year of $122 million, up 18% on the pcp. This division has doubled its earnings in the last six years. Excluding non-recurring items, EBITDA of $29 million and EBITA of $24 million for the year were respectively 18% and 20% higher.
According to Bracewell, growth in this division was strong on both sides of the Tasman throughout the year. Demand for physical storage services for both documents and computer media increased, while the newly-introduced digital information management services gained support from new and existing customers. LitSupport, acquired in December 2014, is not yet trading to expectations. Mr Bracewell says if its earnings targets are not achieved by December 2015, up to A$5 million of the purchase price will be reimbursed by the vendors.
This division operates in New Zealand through the brands of Online Security Services, Archive Security, Document Destruction Services and Data Security Services and in Australia through the brands of TIMG (The Information Management Group), Databank, Archive Security, Filesaver, LitSupport and Shred-X.
All three internal service providers, Fieldair Holdings, Parceline Express and Freightways Information Services, continued to deliver outstanding service, underpinning the service offered by Freightways’ front line businesses.
Looking ahead, MD Bracewell said Freightways Group businesses "are well positioned to benefit from the growth opportunities that exist in the express package & business mail and information management markets."
Although not at the same rate as the last 12 months, he expects the express package market to continue expanding, "while the business mail operations of DX Mail and Dataprint are also expected to sustain their positive growth, largely from market share gains."
The information management market is also expected to continue its growth due to the lower cost for businesses of outsourcing document and computer media storage requirements. He says "customers will continue to seek complementary and substitute electronic services relating to the creation and management of business information, which Freightways' businesses are also able to offer."
Capital expenditure for the full year of approximately $20 million is earmarked to support the growth and development of both Freightways divisions, with cash flows forecast to remain strong throughout the year.
Freightways will also continue to seek out and develop strategic growth opportunities, including acquisitions and alliances, which complement its core capabilities.
