Financial result for the six months ended September 2008 (Unaudited)
The Mainfreight Group is pleased to report a net profit (before non-recurring items) of $17.22 million for the first six months of the 2009 financial year. This represents a $1.49 million or 9.5% increase when compared to the same period last year.
Consolidated sales revenues for the period were $625.02 million compared to $383.33 million, an increase of 63.0%. Excluding foreign exchange adjustments, the increase is 59.4%.
EBITDA performance improved to $35.36 million from the prior year's result of $28.72 million for the same period; an increase of 23.1%. Excluding foreign exchange adjustments, the increase is 21.3%.
Sales revenue improvements were achieved in all businesses, in all countries. The upturn seen in our operations in the United States of America reflects the contributions of the newly acquired business of Mainfreight USA, and the ongoing improvements being achieved by CaroTrans. EBITDA results also showed continued strength with improved performances from our New Zealand Domestic operations, Australian International and all divisions in the United States.
The Directors of Mainfreight have approved an increase in the interim dividend from 8.0 cents per share to 8.5 cents per share.
This dividend will be fully imputed and will be paid on 12 December 2008, with books closing on 5 December 2008. A supplementary dividend will be paid to non-resident shareholders.
Divisional Performance (all figures in New Zealand dollars)
New Zealand Domestic
A continuing strong market presence has resulted in an increase in revenue levels against the prior year. Sales revenues improved 14.5% to $153.51 million, while EBITDA improved 12.8% to $16.91 million from $14.99 million.
Further market share gains during September and October will boost trading levels from November onwards.
Fuel price reductions have seen the fuel adjustment factor for our customers reduce, easing freight rates across the country.
Margins remain consistent with the prior year.
New Zealand International
Sales revenues continue to improve; up 4.5% to $51.00 million, however EBITDA decreased 16.5% to $1.63 million as margins contracted as a result of our freight mix moving from export-related tonnage to imports, predominantly from Asia. Export sales reduced 6% during the period.
Our new air-freight facility in Auckland will commence operations during November and has already attracted additional perishable air-freight tonnage.
Sales growth continues to improve, up 37.2% to $95.10 million from $69.30 million. EBITDA declined 14.9% to $4.25 million from $4.99 million in the prior year. The EBITDA decline is primarily in our warehousing division where costs continue to be incurred as we increase our warehousing footprint. Redundant property costs for the period totalled $1.23 million. Of these, $0.46 million will be offset from November as sub-leasing arrangements commence. Domestic Transport EBITDA improved 13.9% through an increase in market share.
Sales revenue continues to improve as the acquisition of Halford International is consolidated, up 40.6% to $94.74 million. EBITDA improved 5.8% to $2.79 million.
Trading from Halford has been disappointing particularly during July. Integration of the business into Mainfreight has been slower than our expectations, primarily due to technology and communication delays. Office integration has been completed in Brisbane, Perth and Adelaide, while the Sydney and Melbourne sites are expected to be completed during April and May 2009 as premises are modified.
All operations are now under the brand of Mainfreight and have a common operating system. Agreements have also been cemented with Halford's international agents covered under the WACO Agency network. Over-tonnaging in the Asia to Australia trade lanes has seen pressure on inbound sea-freight margins. This is expected to improve during the third quarter. Air-freight opportunities continue to be developed as a consequence of the Halford acquisition with dedicated services commencing into Australia from Hong Kong, Shanghai and Chicago.
The Australian currency conversion rate utilised for this first half was 82.0 cents.
United States of America
Our US-based operations have seen their revenues increase 254% to $218.82 million and EBITDA improve 138.1% to $8.41 million.
Mainfreight USA contributed $127.74 million in sales revenue, up 7.1% from the prior year, and achieved EBITDA of $3.43 million, an improvement of 15.5%.
The development of Mainfreight USA is continuing under the direction of senior Mainfreight personnel now based in Los Angeles.
There remain significant opportunities, including capturing greater international market share and development of a stronger "everyday domestic freight" focus, improved linehaul management, and the migration to improved technology to enhance operating systems and customer service.
CaroTrans continues its growth, with sales revenues increasing 47.2% to $91.08 million. EBITDA increased 41.1% to $4.99 million up from $3.53 million. Increased export volumes from the USA have assisted these improvements, although gross margins have been affected with increased FCL volumes and difficulties encountered in the recovery of the additional fuel adjustment factors. This is expected to improve as fuel costs ease.
The US currency conversion rate utilised for this first half was 74.0 cents.
Our Asian revenues increased 28.5% to $11.88 million. EBITDA decreased 13.9% to $1.36 million solely due to increased costs incurred as we develop the region for further growth. These costs cover personnel, increased property leases, technology development and the opening of new branches.
Market share remains small in light of what is available, with many trade lanes yet to be developed fully. Opportunities continue to be significant within the region.
The same period in the prior year had consolidated trading of two months.
Group Operating Cash Flow
Operating cash flows were $20.24 million compared with $16.03 million for the same period last year.Net capital expenditure in the half year was $20.60 million. Property development costs contributed $14.10 million to this amount. Funding facilities remain more than adequate for the Group's current and medium term requirements.
A satisfactory result from all business units in the Group, particularly in respect of the ongoing revenue growth across all our markets. We remain focused on improving our market share across all our areas of operation, particularly in those countries where our current share is small relative to the market size. In our strongest market, New Zealand, we continue to be presented with growth opportunities as a result of our core strengths, quality and the size and scope of our network coverage. In the current environment we are adopting a cautious, prudent approach to costs and capital expenditure. Trading into our third quarter, traditionally our strongest, has been encouraging.