Freightways says express package growth slowed in 2H

Freightways says express package growth slowed in 2H, may flow into FY2020

By Rebecca Howard

May 23 (BusinessDesk) - Freightways says softer express package business growth in the second half poses some risks for the 2020 financial year.

The firm noted "slowing same-customer growth for Express Package in the second half of FY19, particularly in March and April," in slides for a presentation at the Craigs Investor Day in Auckland. According to its web site, around 200,000 items a day are picked up, processed and delivered by its express package and mail brand.

Freightways said that it has re-secured the group's largest customer for another three-year term "but at discounted rates which will flow through FY20."

Regarding other risks for the 2020 financial year, it said it expects "softer organic Express Package B2B growth based on trading in the second half of FY19." According to the presentation the B2B represents about 75 percent of volume with residential deliveries accounting for the rest.

Freightways also said that New Zealand Post has established a new pricing regime for bulk mail that directly targets the areas that its DX unit delivers to and which will require DX to offer lower prices to retain this work. The DX mail brand began as an interchange system for lawyers exchanging documents between practices and is now focused on business mail communication.

Regarding possible opportunities, it said the Express Package competitor price rises look to be higher than in previous years and "the pipeline for both new customers and acquisition opportunities is healthy."

In February, Freightways reported a 6 percent lift in first-half net profit, partly due to greater productivity in the express package and business mail division which lifted revenue 7.8 percent to $233.5 million. That accounted for about 74 percent of total group revenue.

The stock was recently down 2.6 percent at $8.52.

(BusinessDesk)

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