Financial Result for the Six Months Ended September 2007 (Unaudited)
The Mainfreight Group is pleased to report a net profit (before non-recurring items) of $15.72 million for the first six months of the 2008 financial year. This represents a $1.30 million or 9.0% increase when compared to the same period last year. A further $61.47 million is added to our net surplus with the gain on sale of Mainfreight’s interests in Lep and Pan Orient and the trading of those businesses in April and May. This brings the total net surplus, including abnormal gains for the period, to $77.19 million.
For our continuing businesses, EBITDA performance improved 6.4% to $28.72 million. After taking foreign exchange effects into account, this increase is 10.2%.
Trading conditions in the first quarter were challenging, as previously advised. July and August saw these challenges continue, however September saw a significant improvement which has continued into the third quarter.
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The Directors of Mainfreight have approved an increase in the interim dividend from 7.0 cents per share to 8.0 cents per share. This dividend will be fully imputed and will be paid on 14 December 2007, with books closing on 7 December 2007. A supplementary dividend will be paid to non‑resident shareholders.
New Zealand Domestic
While revenue (sales) levels remain subdued, EBITDA performance continues to improve, increasing to $15.00 million – an increase of 6.4% over the previous period. Included in this is the one-off property gain on sale of $0.58 million as advised in the first quarter. Trading certainly improved during September and we have seen further improvement during October and November, particularly in areas where market share has improved.
New Zealand International
Revenue levels continue to be affected by the high New Zealand dollar impacting export volumes, however, with a continued increase in import volumes, EBITDA improved to $1.96 million from $1.62 million, an increase of 20.7%. Operating margins have also improved through cost management, and import volumes providing greater opportunities.
Excluding foreign exchange, revenues continued to improve to AU$61.19 million, up from AU$53.20 million – an increase of 15.1%. EBITDA performance decreased 4.9% to AU$4.41 million from AU$4.63 million as we invest in additional warehousing and logistics capacity to cope with increased demand.
Revenue levels continued to further increase during September and October with third quarter EBITDA performance to date showing improvement over the previous period.
Construction of the new Sydney freight facility is on schedule for completion in February 2008, and will provide much needed relief from congestion as Sydney freight volumes increase.
Revenues improved 8.6% from AU$54.82 million to AU$59.52 million. EBITDA is also improved, up 15.7% before foreign exchange to AU$2.33 million.
CaroTrans Oceania has been established in both Australia and New Zealand to allow further development of our wholesale freight product in this market. Airfreight growth is improving.
United States – CaroTrans
Revenues continue to improve, up 25.1% to US$45.84 million. EBITDA improved further to US$2.62 million from $US2.11 million, an increase of 24.1% excluding foreign exchange influences.
Third quarter activity continues to see improvement as CaroTrans gains further market share in both inbound and outbound freight volumes.
United States – Target Logistics
Subsequent to the closing of the reporting period, the acquisition of Target Logistics Inc was completed on 31 October 2007. The acquisition costs for this transaction total US$57.0 million and have been debt funded in US dollars via a US facility at an interest rate of 5.24%. Target Logistics has been de-listed from the American Exchange and will be consolidated into the Mainfreight Group from 1 November 2007.
Target Logistics’ performance is in line with our expectations at the time of acquisition, and will have positive earnings to contribute to the Group’s year end result.
Asia – Mainfreight Express
Trading revenues continue to improve, up 17.7% to US$9.99 million, with EBITDA also improving to US$1.16 million from US$0.87 million. The above results reflect the full half‑year performance, where Mainfreight Group consolidation results only include full trading for August and September.
Full ownership was completed during the July month and full consolidation was effective from 1 August 2007. Senior Mainfreight management have been relocated to Hong Kong to further develop our products and services throughout the Asia region.
We expect to open a new branch in Guangzhou before calendar year end.
Group Operating Cash Flow
Operating cash flows were $16.03 million compared with $18.06 million last year, and were impacted by a lower contribution from discontinued activities of $2.94 million.
Net capital expenditure in the half year was $9.73 million. Property development costs contributed $3.70 million to this amount.
The 9% increase in net surplus before abnormals and sold businesses is a satisfactory result in light of the trading conditions, particularly in the first quarter. Third quarter activity and performance has been considerably stronger and we expect this to continue through to year end.
For further information, please contact Don Braid, Group Managing Director.