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Freightways first-half profit rises 22pc

NZ Newswire logoNZ Newswire 19/02/2017 Jonathan Underhill

Freightways posted a 22 per cent gain in first-half profit, driven by growth in its express package & business mail division, which made up for a drop in earnings from information management.

Net profit rose to about $34 million in the six months ended December 31, including about $4 million of one-time items, from $27.7 million a year earlier, the Auckland-based company said in a statement.

Operating revenue rose 7 per cent to $272.8 million.

Freightways' express package & business mail division made up about three-quarters of its sales and earnings and in the first half the company lifted sales by 8.4 per cent to $202.5 million and earnings before interest, tax and amortisation by 7.4 per cent to $34.8 million, while keeping its ebita margin unchanged at 17 per cent.

"Volume and revenue growth throughout the half year was strong, particularly so in the peak December month," the company said.

"Increased activity amongst existing customers and the winning of new customers contributed to this growth.

Disruption surcharges were introduced during December to offset increased linehaul and delivery costs following November's North Canterbury earthquake."

Information management also lifted sales, by 2.9 per cent to $71.1 million, although restructuring costs at TIMG Australia's LitSupport business, resulted in a 6 per cent decline in ebita to $13.4 million.

By contrast, the information management division had "strong results" from its Shred-X and TIMG New Zealand businesses, it said.

Freightways incurred some costs related to the Kaikoura earthquake, which affected its document storage facilities in Wellington.

"While the racking did its job and withstood the impact of the earthquake, its structural integrity was compromised, particularly in the major site located in Porirua," it said.

"This has resulted in the likelihood of having to repair or replace most, if not all, of the Porirua racking and will involve repositioning boxes while repairs are made or replacement racking is installed."

The company has comprehensive insurance cover for such events and expensed the related deductible as a corporate cost, it said.

Net debt was little changed at $159 million.

The company will pay an interim dividend of 13 cents a share, up 12 per cent from a year earlier, on April 3 with a record date of March 17.

Freightways' shares last traded at $7 and have gained 15 per cent in the past 12 months, tracking the S&P/NZX 50 Index's performance.

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