Freightways

Freightways Announces Half Year Result

7th February 2006

Freightways Limited (NZX:FRE) has delivered record six monthly revenue and profit figures for the half year ending 31 December 2005.

Consolidated operating revenue for the half year of $130 million was 11% higher than the corresponding period 12 months ago, with earnings before interest, tax and amortisation (EBITA) of $29 million up by 10%.

Managing Director Dean Bracewell reports that consolidated net profit after tax of $14 million for the half year was also at record levels, 20% higher than the prior corresponding period. He says the half year figures "reflect another trading period for Freightways where all businesses have delivered improved year-on-year performance."

Following the strong interim result, the directors have declared a dividend of $10.9 million, compared with $9.5 million a year ago. This dividend translates to 8.5 cents per share fully imputed, 13% higher than the previous interim dividend, and will be paid on 31 March 2006. The record date for determination of entitlements to the dividend is 17 March 2006.

In his review of operations Mr Bracewell says the express package businesses again contributed the majority of revenue and earnings, with results from all brands - New Zealand Couriers, Post Haste Couriers, Castle Parcels, SUB60, and Security Express - "all ahead of the prior half year."

Mr Bracewell says "this performance emphasizes the underlying strength of Freightways' well recognized and strongly positioned brands in the marketplace. It also demonstrates the success with which Freightways has implemented its growth strategies in an environment where existing customers have not grown their express package deliveries at the same rate as in recent years."

Contributing to the express package revenue growth during this period has been sales revenue achieved by Kiwi Express, a well established point-to-point courier business operating in Auckland and Wellington, acquired by Freightways in October 2005. This acquisition has been very successful and the Kiwi Express brand has been maintained.

In the area of business mail, DX Mail delivered strong revenue growth, with demand for its broad suite of letter delivery services continuing to grow. Mr Bracewell reports that the development of DX Mails domestic street mail delivery network "is also progressing to plan. While still in its infancy, it is contributing positively to an improved result for DX Mail."

Mr Bracewell says the information management brands (Archive Security, Document Destruction Services and Data Security Services) again delivered a greatly improved result. The relocation of the Auckland operations into a purpose-built facility adjacent to Freightways' main operating site in Penrose was completed in October 2005. "The Archive Security business, in particular, is experiencing significant growth from both existing and new customers", he says. "Subsequently we have brought forward plans to extend our facilities in Auckland, Wellington and Christchurch."

The internal service providers Fieldair Holdings, Parceline Express and Freightways Information Services continued to support Freightways' front line brands with outstanding service. In addition Fieldair Engineering, that offers design, manufacturing and maintenance services to the aviation market, has experienced strong growth.

Mr Bracewell says that while the growth opportunities that exist in all three of Freightways' core markets will "continue to be aggressively yet pragmatically pursued, it is expected that in the near term we will continue to see lower growth from our existing customers than in recent years and the business environment will remain challenging. Our growth strategies are designed to lessen the impact of this slower growth, as has been evidenced by this half year result."

For further information contact:

DEAN BRACEWELL
Managing Director
Freightways Limited
Ph: (09) 571 9670
Fax: (09) 571 9671