Freightways Limited: NZX Announcement

Freightways Limited: NZX Announcement

31 October 2013

Trading Update

An update on the unaudited trading performance of Freightways Limited (Freightways) for the three months ended 30 September 2013 is provided below.

Freightways' revenue totalled $105 million, a 4% increase on the prior comparative period (pcp). Earnings (operating profit) before interest, tax, depreciation and amortisation (EBITDA) of $19.2 million was 3% above the pcp and earnings (operating profit) before interest, tax and amortisation (EBITA) of $16.3 million was 4% above the pcp. Net profit after tax (NPAT) of $9.8 million was 7% above the pcp.

Freightways’ results for the three months ended 30 September 2013 (unaudited):

Our overall first quarter performance is positive and, while still early in the financial year, it underpins our expectation of a full year result ahead of the prior year. This expectation of increased earnings will be further assisted by the anticipated contribution from newly-acquired information management businesses in New Zealand and Australia.

Express Package & Business Mail division
Our express package & business mail division's revenue of $80 million was 5% above the pcp. EBITDA of $13.5 million and EBITA of $12.1 million were both 2% ahead of the pcp, respectively.

Sound activity from existing customers has been further assisted by quality market share gains across all our retail businesses. New Zealand Couriers, the Post Haste Group, that also includes Castle Parcels, NOW Couriers and Pass The Parcel, and the Messenger Services Group, that includes the point-to-point business of SUB60, Kiwi Express, Stuck and Security Express, all performed well compared to the prior year. Our smaller DX Mail business’ year-on-year performance has, as expected, declined during this period as it continues to adapt to a changing business mix, with growth in its mail house business of Dataprint and in its street delivery volumes not yet offsetting the decline in box-to-box letter volume and lower international package volumes. DX is nonetheless making very good progress in transitioning through this structural change to its industry and it continues to contribute profitably to this division’s performance.

Information Management division
Our information management division has again performed strongly, with revenue of $25 million on par with the pcp. EBITDA of $5.9 million and EBITA of $4.8 million were 1% and 4% ahead of the pcp, respectively.

Our businesses on both sides of the Tasman continue to perform very well with strong revenue growth of 9% in New Zealand and 6% in Australia (on a constant currency basis) ahead of the pcp. The translation of our Australian performance at the currently stronger New Zealand dollar exchange rate compared to the lower New Zealand dollar exchange rate in the pcp has resulted in a divisional revenue result that is on par with the pcp. Growth from existing customers and market share gains in all locations contributed to offsetting our higher costs relating to the increased capacity we have recently invested in and again lower recycled paper prices.

Corporate
Corporate costs continue to be well contained and are tracking lower than the pcp.

Recent acquisition activity
Effective from 1 October 2013, Freightways has acquired the business and assets of Brisbane-based Document & Data Storage Management and the Dunedin-based Document Destruction Services. The total cost of these acquisitions is approximately $4.5 million. Upon completion of the integration of these businesses the full 12-month EBITDA contribution expected from them is $0.8 million. These acquisitions complement our existing capabilities and add long-standing customer relationships, experienced people and scale to our existing operations.

Freightways' financial performance over the longer term
The graphs below demonstrate the strong historical performance of Freightways:

NB: Historic EBITA amounts above for the years ended 30 June 1999 to 2003 have been presented on a pro-forma basis consistent with the Freightways Investment Statement and Prospectus issued in August 2003.

Outlook
Our express package & business mail division is expected to perform soundly overall and continue the positive trend seen in our first quarter result.

Our information management division is expected to continue its strong growth and deliver further improved margins as its new capacity is progressively utilised and its newly-acquired businesses are fully integrated within our existing businesses.

Freightways will continue to seek and develop growth opportunities, including acquisitions and alliances that complement its core capabilities.

Subject to business factors beyond its control, Freightways is well positioned to benefit from any further improvement in the markets in which it operates.

ENDS

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