Trading Update

Freightways’ 1st quarter results (unaudited):

 

	Quarter Ended:
	Sept-16 $000	Sept-15 $000	Variance
Operating revenue	133,868	126,783	5.6%
EBITDA	25,459	25,296	0.6%
EBITA	22,679	22,215	2.1%
NPATA	15,226	13,951	9.1%
NPAT	14,808	13,479	9.9%

 

This first quarter result represents a sound start to the financial year, the highlight being the strength of underlying volume growth and activity being experienced in both our express package & business mail division and information management division. A lower interest expense has also contributed positively to the NPATA and NPAT results.

 

Express Package & Business Mail division

This division’s unaudited result is as follows:

	Quarter Ended:
	Sept-16 $000	Sept-15 $000	Variance
Operating revenue	98,218	92,187	6.5%
EBITDA	17,317	17,067	1.5%
EBITA	16,159	15,601	3.6%
EBITA Margin	16.5%	16.9%

 

Revenue growth of 6.5% was underpinned by strong volumes from existing and new customers. Operating costs were higher than normal as we progressed the transition from our previous freighter aircraft to Boeing 737-400 aircraft. The full benefit of this transition will be experienced in the 2018 financial year when we are able to operate from our new facility currently being built at Christchurch airport. EBITA growth of 3.6% is a positive outcome for the quarter.

 

Information Management division

This division’s unaudited result is as follows:

	Quarter Ended:
	Sept-16 $000	Sept-15 $000	Variance
Operating revenue	35,937	35,178	2.2%
EBITDA	8,537	8,633	(1.1)%
EBITA	7,325	7,426	(1.4)%
EBITA Margin	20.4%	21.1%

 

Revenue growth of 2.2% is a sound outcome when allowing for the stronger NZD:AUD exchange rate than in the pcp and is underpinned by increasing volumes and activity across most service lines. Offsetting very good Shred-X and TIMG New Zealand results were higher operating costs at TIMG Australia that included initial one-off costs relating to the relocation and merging of three facilities into one in Sydney and restructuring costs at TIMG Australia to better position its LitSupport business for the future. Effective 1 July 2016, LexData, a small litigation support business, was acquired and merged with LitSupport. An accrual relating to the final LitSupport earn-out payment in 2017 is not now expected to be fully required so it has been partially reduced by $0.9m, the benefit of which is included in this result.

 

Corporate

Corporate costs continue to be well contained and capital expenditure remains at targeted levels. Major capital expenditure items relate to investment in new purpose-built facilities in Sydney to create capacity for current and future expected growth and a new depot at Christchurch that will accommodate all our local express package businesses and DX Mail, be automated and have airside access to our aircraft.

 

Outlook

Volumes and activity experienced in this first quarter result support Freightways’ expectations of again improving its overall year-on-year performance. As previously stated in our full year announcement in August, results from the express package & business mail division will partly be offset by the investment we are making in increased capacity to accommodate current and future expected growth in the information management division. Additionally, some one-off project work achieved by Shred-X in 2016 is not expected to repeat in 2017.

Capital expenditure for the full year is expected to be approximately $23 million to support the growth and development of both Freightways operating divisions. Overall cash flows are expected to remain strong throughout the 2017 financial year.

Freightways will continue to adapt and position itself to realise the growth opportunities that exist in the markets it operates in, along with seeking out and developing strategic growth opportunities, including acquisitions and alliances where it makes commercial sense to do so.

For further information contact:

DEAN BRACEWELL

Managing Director
Freightways Limited
Ph: (09) 571 9670