Freightways profit drops 33% on weak economy, tax

Freightways profit drops 33% on weak economy, tax changes

August 16 (BusinessDesk) – Freightways Ltd. posted a 33% drop in profit as the tepid economy sapped demand for express packages and the courier company took a charge for changes to tax rules.

Net income fell to $23.2 million in the 12 months ended June 30, from $34.6 million a year earlier, the company said in a statement today. Operating revenue fell 3% to $328 million and Freightways took a charge of $5.7 million for changes to tax depreciation on property.

Shares of the courier firm have lost a fifth of their value this year as a slower-than-expected economic recovery reduced volumes of express parcels for existing customers. While volumes picked up in the second half, the impact of further growth in the New Zealand economy will be “gradual,” the company said. To bolster returns, Freightways has added services such as its Pass the Parcel freight delivery for TradeMe customers.

“We have not yet experienced a sustained, across-the-board improvement in all our businesses, which indicates to us ongoing market uncertainty and suggests that the impact on Freightways of an improving economy will continue to be gradual,” managing director Dean Bracewell said.

In the face of a slow recovery, the company will look to actively manage its cost base, he said.

Earnings before interest, tax, depreciation and amortization was $63.7 million, in line with Forsyth Barr analyst Rob Mercer’s forecast of $63.9 million.

The shares fell 0.4% to $2.67 on the NZX today. The company will pay a final dividend of 7 cents a share, down from 8.5 cents a year earlier.

Operating revenue at its Express Package & Business Mail unit, which accounts for 78% of earnings, fell 4% to $263.5 million. EBITDA declined 5% to $48.9 million.

Revenue at its information management division rose 9% to $66.2 million from the year-earlier ‘normalised’ figures. EBITDA was 12% higher at $15.5 million.

(BusinessWire)

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