Daily ShareChat: Mainfreight

By Jenny Ruth

Thursday 11th June 2009

Mainfreight's latest results reflecting significantly tougher trading results, boosted by its decision to sacrifice previously accrued staff bonuses, says Marcus Curley at Goldman Sachs JB Were.

"Fourth quarter EBITDA (earnings before interest, tax, depreciation and amortisation) before staff bonuses fell by around 32% due to lower volumes from existing customers, lower freight rates and downward pressure on margins," Curley says.

He cut his earnings forecast for 2010 by 20% and for 2011 by 15%, mainly reflecting lower earnings contributions from parts of the company directly exposed to continuing declines in global freight volumes.

"In order to turn positive on Mainfreight we need to gain greater comfort over the pace of turnaround in global freight markets or material share price weakness."
The company said trading so far this year is below the same period a year earlier.

Nevertheless, Mainfreight's management deserves "high accolades" for its aggressive response to the current conditions which includes a hiring freeze, deferring about $60 million in capital spending and cutting the staff bonuses which were $9 million before tax in the previous year.

"This represents a true testament to the strength of Mainfreight's company culture. A number of other New Zealand companies could learn a lot from the approach taken by Mainfreight," Curley says.

BROKER CALL: Goldman Sachs JB Were rate Mainfreight (NZX: MFT ) as hold.

Comments from our readers

No comments yet