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Fliway's capacity struggle hits profit

NZN 6/06/2017 Paul McBeth

Fliway Group has cut annual earnings guidance as growing capacity constraints squeeze the listed transport and logistics firm's margins, even as revenue grows with rising transport volumes.

Net profit is expected to be between $3.5 million and $3.8m in the 12 months ending June 30, down from a previous forecast range of $4.2m to $4.4m, Fliway said on Wednesday.

Earnings before interest, tax, depreciation and amortisation are projected to be between $8m and $8.3m and revenue will likely exceed $82.6m.

Fliway was dealing with transport volumes ahead of prior periods and with linehaul equipment availability remaining reduced, this has led to short-term fleet capacity constraints, chief financial officer Jim Sybertsma says.

"As a result, Fliway is having to utilise higher cost external freight capacity to support increased volumes."

The Auckland-based company posted a 39 per cent drop in first-half profit as the loss of a major customer was compounded by increased freight costs from the Kaikoura earthquake.

The company on Wednesday said it expected second-half revenue to be about 4.8 per cent ahead of the $38.8m in the same period a year earlier, implying sales of $40.7m.

The transport group also said it expected a smaller earnings contribution from the UPS-Fliway joint venture as it sought to cut the cost of delivering packages across New Zealand.

"The import package volumes are lifting, but the growth is currently not enough to offset the changes made in the joint venture compensation model," Sybertsma said.

Fliway shares last traded at $1.05, down 1.9 per cent so far this year.

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