Daily ShareChat: Mainfreight

By Jenny Ruth

Thursday 6th August 2009

Mainfreight's address to shareholders at the annual meeting that it expects a tough 2010 financial year and that June quarter results due on August 20 will reflect that are consistent with the freight indicators he monitors, says First NZ Capital analyst Kar Yue Yeo.

Mainfreight also said trading in July showed improvements in volumes, particularly in Australia. The company also outlined initiatives undertaken to drive cost savings and improve market share.

Those indicators have been showing "some signs of flattening and modest improvement on a sequential basis in recent weeks," he says.

The forecast volume fall-off in the first quarter has been so significant it will more than offset the cost savings achieved. Yeo is expecting earnings before interest, tax, depreciation and amortisation for the quarter will drop to $11 million, 33% down on the $16.4 million reported for the first quarter last year.

"Our expectation is for volumes to improve over the course of the next six months, although this recovery (like most) will be uneven across different geographies and also across different segments within a market," he says.

For example, New Zealand export volumes have been rising in recent months while import volumes into New Zealand have been falling.

Recommendation: neutral.

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