Australia and US drag down Mainfreight half-year

By Phil Boeyen, ShareChat Business News Editor

Tuesday 21st November 2000

Mainfreight has announced an interim profit of $812,000, down 73% from last year's $3 million result due to costs associated with its K&S acquisition in Australia and a loss at its US associate company Carotrans.

Restructuring of K&S Express cost $807,000, interest cost of the purchase was $440,000 and there was an increase in goodwill amortisation of $404,000. The loss at Carotrans, in which Mainfreight has a half-share, was $793,000.

Despite the negative effects of the two companies, Mainfreight's MD, Don Braid, says the directors are very happy with the established businesses, with third quarter results looking very strong.

"Considerable gains in the new businesses have been made in Australia and America. We have an unrelenting focus on profitability in Australia and USA acquisitions."

Mr Braid says Mainfreight's Australian operations have been extensively restructured, and the business there is expected to break even before April 2001. In the US he says the second quarter for Carotrans was much improved, and new Carotrans management is moving to streamline the business on to profitable trade lanes.

Mainfreight's revenue for the six months to the end of September stood at $200 million, up from $149 million last year. Excluding acquisition revenues, year-to-date sales were up 10.8% on 1999.

In New Zealand the company credits its domestic operations with making a significant contribution to the half-year result, with sales rising nearly 8%, gross margins improving and provincial branches benefiting from the rural upturn.

If the new acquisitions of K&S and Carotrans are excluded from the half-year result, the company's established operations produced a net surplus of $3.9 million, up 22% on last year.

However the company's New Zealand international business remains significantly down on last year with earnings before interest, tax, depreciation and amortisation falling from $932,000 to $525,000, mainly due to a drop in Lep NZ's export gross margin.

Mainfreight has declared an interim dividend of three cents per share.

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