Mainfreight reports 'inconsistent' quarter

By Phil Boeyen, ShareChat Business News Editor

Wednesday 20th February 2002

Transport operator Mainfreight (NZSE: MFT) has described third-quarter trading as inconsistent although there has been continued improvement in Australia.

For the nine months ended December the company says it met expectations with a net surplus of $4.59 million compared to the previous result of $2.51 million.

However the previous figure included the acquisition in Australia of K&S Express and the investment in the US of Carotrans. Excluding those figures, the nine-month net surplus to the end of December 2000 was $7.68 million.

Consolidated revenues for the nine months ended December were down by $5.1 million, affected primarily by the Australian domestic division. All other sales increased by 4.5%.

On a quarterly basis the company reports that its troubled Australian domestic business delivered positive earnings before interest, tax, depreciation and amortization of $49,000. This compares to a $788,000 loss in the September quarter and even larger losses in the previous quarters.

"Our Australian domestic operation is now well positioned to contribute to group results," the company says.

"Service levels are satisfactory, with network and owner-driver issues virtually complete. Significant sales opportunities are currently under quotation, with results expected to trade during the first quarter of the new financial year."

In its half-year result Mainfreight had predicted a strong improvement in the division's December quarter trading results, based on volumes and activity at the time.

The company's Australian international division reported a solid increase in nine-month Ebitda to $3.6 million from $2.28 million previously, helped by its Lep Perth acquisition.

Its international business in New Zealand also posted strong Ebitda growth for the same period, rising to $1.92 million from $1.05 million previously, however Ebitda for the local domestic division fell by 1% to $13.9 million.

"Our supply chain division's growth continues to assist these results, although a poor performance in warehousing and a high bad debt expense in the quarter has diluted the gains made in transport. Efforts continue to improve warehouse utilization."

Mainfreight's operating cash flow surplus was $11.094 million compared to $417,000 previously but the company notes that working capital requirements for Australian domestic operations affected the prior year's cash flow.

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