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Fliway hit by lost client, Kaikoura quake

NZN 7/02/2017 Paul McBeth

Fliway Group's first-half profit has dropped 39 per cent as the impact of a major customer's exit and higher freight costs caused by last November's Kaikoura earthquake weighed on the transport and logistics group.

Net profit fell to $2.2 million in the six months ended December 31, from $3.6m a year earlier, the Auckland-based company said on Wednesday.

Revenue slipped 1.4 per cent to $43.2m as a new customer won in December and upgrades to existing clients bolstered sales in the final month of the period.

Profit fell short of Forsyth Barr analyst Andy Bowley's forecast of $3.1m, although revenue exceeded his expectation for sales of $40.5m.

Fliway had previously signalled the unnamed lost customer would hit underlying earnings by about 10 per cent and embarked on a cost-cutting exercise last year to offset the impact. While personnel costs fell 4 per cent to $14.5m, disbursement costs were up 3.4 per cent to $12.1m and freight costs jumped 33 per cent to $2.4m.

Capacity constraints in its transport business and the Kaikoura earthquake, which transferred significant rail freight volumes on to road, had hurt, Fliway said.

The board declared an interim dividend of 2 cents per share, down from 3.3 cents a year earlier.

The transport group expected its second-half performance would be an improvement on the prior year.

Revenue from Fliway's domestic business edged down to $29m in the period from a year earlier, while earnings before interest, tax, depreciation and amortisation dropped 27 per cent to $4.3m and the international segment's sales slipped 2.7 per cent to $14.2m for a 0.8 per cent dip in ebitda to $2m.

Its joint venture with UPS boosted the volume of import packages by 13 per cent in the half, although earnings from the unit fell to $458,000 from $613,000.

The shares last traded at $1.17 and have gained 22 per cent over the past 12 months.

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