Tough economic conditions impacted on the results of New Zealand’s leading express groupFreightways for the half year ended 31 December 2009 with lower revenues and profits.
Consolidated operating revenue dropped 4% to $165 million (€84.5 million) (adjusted for fiveextra trading days in H1, 2008-09). Operating profits (EBITDA) fell 8% to $32 million (€16.4million) while EBITA was 10% lower at $27 million (€13.8 million). Consolidated net profit declined8% to $14.5 million (€7.4 million).
Managing director Dean Bracewell described the results, while below the previous six months,as “very satisfactory given the impact of the economic downturn on domestic activity during thisperiod” and a clear demonstration of Freightways’ resilience to market conditions.
The core Express Package division, covering subsidiaries New Zealand Couriers, Post HasteCouriers, Castle Parcels, NOW Couriers, SUB60, Security Express and Kiwi Express, had lower volumesand revenues. Exact figures were not disclosed for the division, which contributes the bulk ofrevenues and profits.
The express businesses focused on cost control and service quality but also continued toactively seek quality market share growth and to develop strategic growth opportunities, Bracewellsaid. “Among a number of key successes has been the winning of Australia Post’s internationalinbound express mail service, air parcels and courier product deliveries into New Zealand,” hepointed out.
“The fluctuating customer activity that was evident through the early and mid-2009 calendaryear has been less so towards the end of the year. While volumes remain lower than the previousyear in some of our businesses, encouragingly this is not the case across the entire division.Until however a more broadly-based performance improvement is evidenced, we anticipate the recoveryof the economy, and how it translates into the performance of Freightways’ express packagebusinesses, will be gradual,” the company stated in its half-year report.
Postal unit DX Mail, which competes with NZ Post, has established itself as a viablealternative to the state-owned enterprise but still faces high competitive barriers, Freightwayssaid. The company sees the recent attempt by NZ Post to radically change access arrangements forindependent postal operators, including DX Mail, for final deliveries as an attempt to thwartcompetition. As a result, Freightways has lodged a complaint with the Commerce Commission and askedthe government to facilitate the appointment of an independent regulator for the good of allstakeholders in the postal industry.
The Information Management division, which contributes around 20% of Freightways’ totaloperating earnings, had another good six months, with the Australian businesses in particularshowing great resilience to the economic downturn, the company noted.
Looking ahead Bracewell said the domestic economy is “showing signs of improvement and thishas also been evident in some areas of the group. However we have yet to experiencesustained, across-the-board improvement, which indicates there is still continuing marketvolatility. It also suggests the impact on Freightways of an improving economy will begradual.”
The group will continue to actively manage costs, seek to improve service quality, and lookto benefit from quality market share wins. Freightways “has strengthened its earnings profile bydiversifying its activities, and subject to factors beyond its control, is well positioned tobenefit from further improvements in the marketplace,” Bracewell concluded.
