Mainfreight smashes profit record

Mainfreight has delivered another record result with its net profit soaring by 89 per cent, or $163.7 million, to $355.4m for the year ending March 31, 2022.

Net profit after tax from its divisions outside of New Zealand makes up more than 72 per cent of the total, but the company notes it has also seen improved profitability and growth in its domestic warehousing and transport operations.

Mainfreight’s profit before tax for the full year came in ay $489.4m, an increase of 86.5 per cent or $227m on the previous reporting period, and revenue of $5.2 billion was up by 47.2 per cent or $1.7b.

Don Braid, group managing director, says: “We are pleased with this result, particularly in light of ongoing supply chain disruptions and pandemic-enforced lockdowns.

“This financial performance reflects the extraordinary economic conditions in all five regions where we are located.”

Braid, pictured, adds supply chain congestion brought inflated shipping and air freight costs during the financial year and that is reflected in its revenues.

However, he notes the company is not expecting the quantum of profit improvement of the past year to repeat in the short term. “Rather we anticipate we will revert to our normal levels of revenue and profit growth.”

Operating cash flows were $503.8m, up from $376.3m in the prior year, reflecting increased profitability and satisfactory cash collection across all regions.

Its net debt was $1.1 million, down from $102.2m a year earlier, and current debt facilities are $494.3m, of which $319m remains undrawn.

The company’s net capital expenditure was $189.1m and that figure is expected to hit $540m over the next two years is $540 million, of which $450m will be on property. 

“In conjunction with this, a further 54 leased opportunities will be completed in this period,” adds Braid. “These are dominated by warehouses in New Zealand and Australia, and warehousing and transport facilities in the Americas, Europe and Asia.”

A final dividend of 87 cents per share fully imputed at the 28 per cent company tax rate has been approved, which brings the full dividend for the year to 142 cents per share, a year-on-year increase of 89.3 per cent.

New Zealand 

For Mainfreight’s New Zealand operation alone, revenue for the full year was $1.13b, which was an increase of 33.7 per cent or $284.6m from the previous year.

At the same time, profit before tax climbed 39.5 per cent, or $38.7m, to $136.5m.

“Our New Zealand business has performed well and we continue to find opportunities for more growth,” notes Braid.

“Our domestic transport network handled record volumes, and at the height of New Zealand’s pandemic response, delivered more freight direct into homes across the motu than ever before. 

“Increased stock holding requirements of our customers squeezed our Warehousing business to over-utilisation, reinforcing the decisions taken to invest in larger facilities going forward.

“For our air and ocean operations, a lack of international shipping and air capacity, has proved frustrating to say the least, when trying to secure service and space for our export and import customers.

“Regardless of external issues, we remain confident the New Zealand business will see improvements domestically, and we expect international trade capacity to improve as the year progresses.”

He says planned capital investment in New Zealand for land and buildings currently exceeds $195m over the next two years and an order for a 10 electric pickup and delivery vehicles has been made.

Global performance

Across the ditch, revenue jumped by 34 per cent and profit before tax by 50.3 per cent as Mainfreight continued to gain market share and see improved volume growth across all three core products.

In Europe revenue was up 32.8 per cent and profits by 41.7 per cent, with the company expecting further growth opportunities in the short- to medium-term.
 
Mainfreight’s Asia division was the star performer in percentage terms as revenue soared by 121.5 per cent and profits were 309.4 per cent higher than the prior year.

Increases in business in the Americas was not far behind and clocked increases of 88.8 per cent and 289 per cent respectively. 

Braid says the company predicts supply-chain congestion will continue worldwide for the immediate future, with ongoing Covid lockdowns in Shanghai and the Russia/Ukraine crisis having an impact.