Media Release
Freightways Delivers Again With Record Full Year Result
AUCKLAND, Monday 18 August 2008: Freightways Limited (NZX:FRE) has been able to shrug off a challenging domestic market
to achieve record revenues and earnings for the year ended 30 June 2008.
Managing Director Dean Bracewell reports that the successful execution of Freightways’ growth strategy in the Australian
market, a sound result from its core express package division in a challenging local market and outstanding performance
from the information management division, all combined to help the company continue its run of consecutive record annual
results since listing on the NZX in September 2003.
Consolidated operating revenue for the year (to 30 June) of $324 million - topping $300 million for the first time - was
14% up on the previous year, with earnings before interest, tax, depreciation and goodwill amortisation (EBITDA) of
$68.5 million, 9% ahead of the previous year. Earnings before interest, tax and goodwill amortisation (EBITA) of $60.5
million for the year were up 7% on the previous year.
Cash generated from operations for the year before interest and tax was $67.5 million, 8% higher than the previous year,
while consolidated net profit after tax (NPAT) of $32.3 million was 5% higher than the previous year.
Freightways has declared a final dividend of $11.9 million, delivering a full year payout in line with its dividend
policy. This translates to 9.25 cents per share (fully imputed), to be paid on 30 September 2008. The record date for
determination of entitlements to the dividend is 12 September 2008. This brings the total payout in respect of the year
to $24.1 million or 18.75 cents per share (fully imputed), 4% higher than the previous year.
According to Mr Bracewell “despite a very challenging operating environment in New Zealand, including rising fuel costs
and negative organic volume growth, Freightways has delivered another record result and better positioned itself for
future growth.” He expects Freightways “to continue achieving positive performance for shareholders and other
stakeholders, subject to business factors beyond its control.”
In the express package division, which continues to contribute the majority of Freightways’ revenue and earnings, Mr
Bracewell acknowledged that “the increased cost of fuel has had a significant impact. Despite this and other cost
pressures, including the Government’s surprise increase to Road User Charges, Freightways continues to make decisions
for the long-term good of the business.” This division includes New Zealand Couriers, Post Haste Couriers, Castle
Parcels, SUB60, Security Express, Kiwi Express and the recently acquired NOW Couriers that has delivered against initial
expectations under Freightways’ ownership.
Mr Bracewell says the express package division achieved earnings for the year slightly above what it achieved in the
previous 12 months, “which is a credit to the strength and flexibility of the Freightways model and to the team who
delivered this result.”
DX Mail, which operates in the domestic postal services market significantly grew its overall volume and revenue, but
struggled with earnings in the second half of the year due to a changing business mix that affected margins. In
addition, DX Mail had to invest in adjusting its operation to comply with the new pricing-in-proportion regime
introduced to the market by NZ Post in March 2008.
Mr Bracewell says Freightways views the information management market as “an emerging growth opportunity, as evidenced
by its recent acquisitions. The group’s information management businesses currently contribute around 15% of
Freightways’ annual revenue and earnings and are experiencing strong growth on both sides of the Tasman.”
In July 2007 Freightways acquired the document destruction businesses of Shred-X and DD in Queensland, both of which have delivered to expectation. This led to the recent purchase of Fine Paper Suppliers, a
similar business in Victoria. Meanwhile, the DataBank business, which operates in NSW, Victoria, South Australia and
Queensland, extended its National presence in Australia by purchasing National Record Managers (ACT) and Moorside
Document Storage (Victoria).
The group’s providers of internal services, Fieldair Holdings Limited, Parceline Express and Freightways Information
Services, all continued to deliver outstanding service and Mr Bracewell says each has the capacity to accommodate future
growth.
“In recent years Freightways has successfully embarked on diversifying its activities both geographically and deeper
into the informational management market,” notes Mr Bracewell. “We will continue to seek out and develop growth
opportunities that complement our existing capabilities to support this strategy.”
Looking forward, Mr Bracewell expects Freightways’ core express package division to continue to perform soundly overall,
although fluctuating month on month volume, such as is currently being experienced, makes it difficult to accurately
forecast near term performance. While some cost increases are expected to moderate in the 2009 financial year, the cost
of fuel is naturally very difficult to predict. Freightways’ business mail operation is expected to improve its year on
year performance in 2009 and Freightways’ information management businesses both in New Zealand and Australia are
expected to continue their positive development.
Mr Bracewell expects Freightways’ performance to continue the trend shown in this and recent results announcements,
albeit the performance of the New Zealand economy will influence this outcome. In the medium to long-term, Freightways
is exceptionally well positioned to reap the benefits of any improvement in the New Zealand marketplace.
ENDS