Financial Result for the Three Months Ended June 2006 (Unaudited)
The Mainfreight Group is very pleased to report a net profit after taxation of $6.33 million for the first three months of the 2007 financial year. This represents a $2.10 million or 49.7% increase when compared to the same period last year. Included in the result is an after tax abnormal gain of $0.80 million. This is comprised primarily of a refund of prior years’ Work Cover payments in Australia. Excluding abnormals the result provides an improvement of 30.7%.
Consolidated revenues (sales) increased to $233.73 million from $213.41 million; an increase of $20.33 million. Excluding foreign exchange, this is an increase of 3.1%.
The first quarter result reflects our continued improved off shore performance and a steady contribution from our New Zealand operations despite the reduced number of working days in April which had a marked effect on contributions from our domestic operations in both New Zealand and Australia. New Zealand domestic performance in May and June improved on the prior year.
New Zealand Domestic
Revenue and EBIT performance remained steady and in line with the previous year. The reduction of trading days in April due to Easter and Anzac public holidays had a marked effect on its contribution. Trading since April to date has improved on last year.
New Zealand International
EBIT excluding abnormals improved slightly to $0.50 million with revenues improving 4.7%. Abnormals included pre tax restructuring costs of $197,000 as a result of the Mainfreight International, Coolair and Owens International merger. Benefits of the merger will contribute positively throughout the remainder of the financial year and the business is now the largest international freight forwarder in New Zealand with significant inbound and outbound airfreight and seafreight tonnage. These capabilities along with our substantial International network will see a number of opportunities for the new entity.
EBIT excluding abnormals improved to $1.26 million from a small deficit last year. Revenues excluding foreign exchange improved 14.5% to $29.36 million. Trading continues to improve past the quarter’s end and our expectations remain positive for a strong contribution for the full year.
EBIT declined to $1.73 million from $1.93 million the previous year. Revenues were similarly affected, declining 3.9% as a direct result of the fluctuating performance of our Projects division, Pan Orient. Excluding Pan Orient, EBIT improved 20.4%, with a continuation of improvement in our general international freight forwarding operations of Lep and Mainfreight Owens International.
Pan Orient’s performance remains subject to large Project driven activity particularly the Goro Nickel contract in Noumea. It is expected that an increased demand for services in the latter half of this year will see Pan Orient EBIT performance equal to that of the previous year.
EBIT improved to $1.47 million up from $0.54 million. Revenues improved (excluding foreign exchange) 17.3% to $29.00 million. The size of the US market continues to provide ample opportunities for organic growth.
Acquisition advisory services have been engaged to assist in identifying potential acquisition opportunities.
Returns from our Asian interests and the Hirepool investment increased to $0.73 million from $0.53 million.
Our Asian contribution increased 45% to $0.27 million. Peak season tonnage from Asia is expected during our third quarter October to December.
The Hirepool divestment concluded on the 31st of July. Sale proceeds will range from $27 million to $28 million, providing a gain on sale for Mainfreight of approximately $17 million. Subsequent to the sale conclusion date, funds of $14 million have been received. The remaining funds are expected in November 2006 and May 2007.
Group Operating Cash Flows
Operating cash flows were $12.55 million compared with $10.16 million last year. This reflected the increased profitability of the Group.
Capital Expenditure in the quarter totalled $13.43 million. Property development costs contributed $11.50 million to this amount.
The growth of the Mainfreight Group off shore and the ongoing strength of our New Zealand operations have resulted in a satisfactory first quarter result.
Trading continues to improve as we move through the second quarter and is expected to do so for the remainder of the financial year.
For further information, please contact:
Group Managing Director