Profit warning from mainfreight

By Phil Boeyen, ShareChat Business News Editor

Wednesday 21st February 2001

Transport group Mainfreight (NZSE: MFT) is warning that full-year profit hopes may be dashed by large losses across the Tasman.

In its third quarter ended December Mainfreight's net surplus fell to $2.5 million compared with $6.33 million the previous year, dragged down by restructuring costs, interest costs and losses from subsidiaries.

This includes an after tax loss of nearly $2 million from Mainfreight Distribution in Australia, and a loss of $791,000 from an associate company of its US-based Carotrans investment.

"Our year end profit expectations have been adversely affected by the large losses currently being incurred in Australia with Mainfreight Distribution," the company says in a statement.

The losses detract from what the company says was strong growth in its established operations, which produced a net surplus of $7.7 million, up nearly 20% on the previous year. This excludes the acquisition in Australia of K&S Express and the investment in the US of Carotrans

"We are satisfied with the established business's results, and the influence that our supply chain activities are having on our revenue growth is very pleasing," says the company.

"It is still clear to us that this strategy is the correct one for us to pursue to ensure long term growth and profitability.

"Consequently it still remains imperative that we have a network distribution in Australia, and while we incur large short term losses in establishing this network, the ongoing benefits far outweigh any review of this positioning."

Mainfreight says although its US investment in Carotrans has taken some time to produce results, it has secured a substantial amount of new business and future results should be positive.

Revenue for the nine-month period increased to $308.8 million, up from $233.0 million previously. Excluding acquisition revenue, year-to-date sales were up 10.9%.

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