Mainfreight Half Year Net Profit Increases 79% Despite Supply Chain Problems


Mainfreight recorded a 79 percent increase in profits. Photo / Supplied

Supply chain congestion and bottlenecks failed to dampen the half-year financial results of transport and logistics company Mainfreight, which reported a 79% increase in net profit to 130.8 million dollars.

The global operator listed on NZX announced a 41.4% increase in revenue to $ 2.27 billion for the six-month period ended September 30.

Pre-tax earnings increased from $ 79.7 million to $ 181.9 million.

The company will pay an interim dividend of 55 cents per share, an increase of 83.3% from the same period last year.

Managing Director Don Braid said the outcome was satisfactory, especially in light of supply chain congestion and ongoing foreclosure disruptions in most of Mainfreight’s markets.
He attributed this good result to contributions from Mainfreight’s operations in 26 countries in five regions rather than a single remarkable business success.

“It’s consistent with what we want to achieve in the long term, and we’ve seen it in this result.”

Air and sea revenues in all regions have increased due to rising air and sea freight rates and an increase in freight tonnage due to market share gains and consumer demand, t -he declares.

“The air and ocean performance has been exceptional, although this is a really difficult result for our staff to achieve given the shortage of [space] in ocean freight and air freight, ”said Braid.

Mainfreight’s exposure to 26 different countries had provided a significant competitive advantage.

Cash flow from operations was $ 178.4 million, down from $ 188.5 million in the prior period. This reflected supply chain congestion and increasing freight rates in the Air and Marine division, increasing the company’s working capital requirements.

Net debt was $ 115.7 million, an increase of $ 13.5 million from the same period last year.

Debt ratios remained stable at 8.8%.

Net capital expenditures totaled $ 92 million. The capital expenditure forecast for the full fiscal year ending March 31, 2022 was in the order of $ 208 million. An additional $ 290 million has been estimated for capital spending in FY2023.

In Mainfreight’s divisional performance, the New Zealand operation reported a 31.6 percent increase in revenue to $ 498.4 million, and pre-tax profit of $ 48.07 million, up from 28.2 percent.

Regarding the prospects of Christmas freight deliveries in a disrupted New Zealand supply chain, Braid said the company is asking customers to increase their expectations and travel time.

“It’s a just in case, not just in time situation.

“The network volume is high and has not been helped by having just one ferry across the Cook Strait. It is extremely frustrating for inter-island freight transfers.”

The Australian business continued to show increasing growth and profitability, mainly driven by increased market share, Braid said.

Revenue of AU $ 525.04 million increased 30.2 percent from same period last year, while profit before tax rose 45.7 percent to 44.5 million Australian dollars.

The intensification of Mainfreight’s domestic transportation network across Tasmania continued, with three more regional branches opening over the next 12 months. New warehouses for Sydney, Melbourne and Adelaide were under construction and additional capacity was being negotiated for Brisbane.

In European operations, revenue increased 34.4% to 260.4 million euros, while profit before tax increased nearly 78% to 12.5 million euros.

Asian operations reported a 157 percent increase in revenue to $ 110.3 million, and pre-tax profit rose 189.2 percent to $ 11.5 million.

Braid said this result was once again a reflection of consumer demand. “But we were also able to find some traction in our Southeast Asian operations which were relatively small in the past. We were able to find market share, particularly in Thailand and Vietnam for example.”

The Americas business reported a 78 percent revenue increase to $ 441.4 million. Profit before tax was US $ 34.8 million, an increase of US $ 309.7 million.

“There is no doubt that the performance of the airline and shipping companies in America has been extremely satisfactory and this is a factor in what we call the eastbound transpacific from Asia to America. And our ability to find. space on behalf of clients to serve this busy trade link, ”Braid said.

The company’s network intensification continued to increase its regional coverage in most countries, but unprecedented supply chain congestion and demand had necessitated longer delivery waits.

Braid said the semester’s trading post continued current financial and volume trends – “sometimes significantly ahead of the previous year”.

“We remain optimistic that these levels of activity and growth will continue across our global network for the remainder of this fiscal year and into the next.”

The company would provide a nine-month trading update in mid-February, with full fiscal 2022 results on May 26.

Mainfreight’s share price rose 2.7 percent to $ 93.50 from the half-year result.


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