Mainfreight Limited Analysis

Overview

The company's origins go back to 1978 and listing was achieved in June 1996 following sale of 60% of the shares on issue by founder Bruce Plested and Neil Graham at 96c each. The company is a specialist freight forwarding and distribution business, with interests also in managed warehousing, transportation of hazardous substances, air & ocean international freight, full truckload freight and Global Supply Chain Logistics. Based in Auckland, the group's business units include: Domestic transportation and Managed warehousing in NZ, Australia, Americas and Europe, air & ocean international transportation in NZ, Australia, Americas, Europe and Asia with agents world-wide and wholesale air and ocean freight.

Expansion in the late 1990’s included a series of acquisitions including a 75% stake in Lep International (NZ), Lep Air International in Australia and Australian express transport operator K & S Express plus Express Lines, an Australian Air & Ocean operator with interests in Asia. In July 2003, Mainfreight launched a takeover bid for Owens Group, ending up with 79.6% after Toll Holdings acquired a minority position. In May 2005, it completed a full takeover of Owens Group when Toll sold its 11.8% stake. In April 2007 it sold Pan Orient Project Logistics and its 75% shareholding in LEP (New Zealand and Australia) for over AU $83m.

The 2008 year was significant for Mainfreight with a US$53.7m acquisition of US based Target Logistics, a freight forwarding and logistics company; MFT also acquired remaining interests in their Asian operations giving them 100% ownership.

In April 2011 Mainfreight made its largest acquisition to date, a €110.0m acquisition of Europe based (Netherlands) Wim Bosman Group. European operations have now been rebranded as Mainfreight.

In the 2024 financial year revenues are NZ$4.72 billion with 337 branches in 27 countries, and with 10,644 team members.

Performance

The following information was extracted from Mainfreight Limited's full year results, released on 29 May 2024:

Financial result for the twelve months ended 31 March 2024 (Unaudited)

Commentary

Mainfreight is pleased to confirm our full-year financial results to 31 March 2024; a result broadly in line with our expectations and as signalled during our half-year release. Trading has improved during our second half, particularly across our Australasian businesses. Weakness in trading has continued in Asia, Europe, and the USA.

Result Summary:

Revenue $4.72 billion Down 17%

Profit before tax $395.4 million Down 33%

Net profit before abnormals $277.9 million Down 35%

• Adjusted for foreign exchange impact, group revenue is down 18%, and profit before tax is down 33%.
• An abnormal accounting (non-cash) adjustment of NZ$69 million relating to the tax treatment of depreciation on New Zealand owned property.
• Operating cash flows declined from $757 million to $505 million and reflects the reduction in profitability for the period.
• A final dividend of 87.0 cents per share has been authorised by the Board of Directors, payable on 19 July 2024.

This result is in line with our expectations as freight volumes and international sea and air freight rates normalise from the peaks experienced during 2022/2023. We are satisfied with the momentum and progress in New Zealand and Australia, but remain disappointed with our performances in Asia, USA and Europe, where our market share remains small.