Ann: FLLYR: MFT: Financial Reult for Year Ended 3

• Release Date: 30/05/12 10:30
• Summary: FLLYR: MFT: Financial Reult for Year Ended 31 March 2012 (Unaudited)
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MFT
30/05/2012 08:30
FLLYR

REL: 0830 HRS Mainfreight Limited

FLLYR: MFT: Financial Reult for Year Ended 31 March 2012 (Unaudited)

MAINFREIGHT GROUP LIMITED

Financial result for the twelve months ended 31 March 2012 (Unaudited)

Commentary
Mainfreight is pleased to announce a record full year profit before abnormals
of $65.75 million for the year ended 31 March 2012, an increase of 39.2% over
the prior year.

Sales revenues were also at record levels; $1.81 billion, up nearly half a
billion or 35.2% on the prior year.

EBITDA shows a similar trend, up 50.9% to $138.19 million.

Excluding the contribution from our recently acquired European business, Wim
Bosman Group, performance of the remaining business units has similarly
produced record results, with sales revenues reaching $1.40 billion, up 4.1%
and EBITDA at $110.06 million, an increase of 20.2%. (Excluding foreign
exchange effects, revenue was up 7.2% and EBITDA 22.3%).

These results are satisfactory and, in general, are in line with our
expectations.  Certainly the momentum created in the previous twelve months
has assisted our growth and while our second half results were somewhat
behind our aspirations, we are satisfied with the final result.

Business performance improved in our Australian and New Zealand operations
where strong sales activity, particularly in the food, beverage and DIY/home
improvement categories saw freight volumes expand.

Our North American and Asian operations have had mixed results with
Mainfreight USA continuing its improvement from the year prior.  CaroTrans,
our independent NVOCC operation, disappointed as they encountered lower than
expected US export volume in a difficult shipping environment.

Similarly, Asia performed below expectations as falling freight rates and
rising cost structures impacted profitability.

Our latest acquisition, Wim Bosman Group, had a challenging second half,
where lost warehousing volume and poor Belgium freight performance affected
profits.  Financial performance was below the level that would have triggered
an additional EUR10 million earn-out, and this sum (equivalent to NZ$17.06
million) has been written back to the profit and loss account as an abnormal
item.

Nevertheless, the significance of establishing ourselves in Europe should not
be underestimated, where our profile is increasing with multi-national
customers who continue to search for more efficient supply chains.

Non-recurring gains after tax were $14.70 million.  The gain comes from the
write back of the Wim Bosman acquisition earn-out of EUR10 million (NZ$17.06
million), partially offset by non-recurring costs of $2.36 million.

Overall, a satisfactory financial result as world economic conditions
continue to be challenging.  Once again, Mainfreight has taken significant
steps towards our global aspirations.

Divisional Performance (figures in local currencies)

New Zealand (NZ$)
Our New Zealand business units show continued improvement in their financial
performance compared to the year prior.  The ongoing focus on FMCG (fast
moving consumer goods) has increased domestic freight revenue and improved
warehousing utilization.

Regardless of New Zealand's economic conditions, we remain positive about our
own performance in this market and expect a similar trend of improvement to
continue into the 2013 financial year.

Total revenues for the New Zealand group business units increased 8.8% to
NZ$449.04 million from NZ$412.56 million.  EBITDA improved 14.1% to NZ$54.60
million.

In our New Zealand Domestic operations, revenues improved 8.7% to NZ$316.13
million, and EBITDA improved 13.0% to NZ$47.75 million.

Our usage of rail linehaul continues to increase, and our spend with KiwiRail
now exceeds $35 million per annum.  Our new Wellington rail-served facility
is completed and is currently receiving and sending a combined total of more
than 50 rail units per week.

Our Domestic Warehousing operations have seen good increases in utilization
as customer out-sourcing of warehousing gains momentum.

A new food-grade warehouse has been commissioned in Auckland and this,
together with further development in Christchurch, will relieve some of the
pressure resulting from growth.

In our New Zealand International operations, revenues improved 9.1% to
NZ$132.91 million.  EBITDA improved 22.0% to NZ$6.84 million.

Revenue growth has improved across all trade lanes with our Sea Imports up
significantly, followed closely by Air Export growth - particularly to
long-haul destinations.  Once again Perishable volume declined slightly as
the strong NZD/USD cross rate affected perishable export sales.

Australia (AU$)
While the Australian general business economy weakened during this past
twelve months, Mainfreight has continued to increase its profile and market
share, particularly in the domestic transportation and warehousing sectors.

Throughout the year we have worked hard on improving our quality, raising
levels of service and expanding our network. Whilst progress has been
achieved, it has been at a slower rate than expected.  We have much to do to
further improve our network and its effectiveness, but are comfortable with
the advances made to date and the positive customer reaction which has
resulted.

Total revenues for the Australian group business units increased 5.0% to
AU$385.43 million (up from AU$366.97 million in the year prior) and EBITDA
improved 31.1% to AU$26.11 million.  Interestingly our Australian operations
now generate 61.9% of our New Zealand EBITDA - a far cry from the early days!

In our Australian Domestic operations, revenues improved 16.1% to AU$203.22
million and EBITDA improved 43.0% to AU$18.78 million from AU$13.14 million
last year.

Domestic freight volume was at record levels for Mainfreight and is now at
levels where our older facilities in Victoria, Queensland and South Australia
are struggling to cope.

Land has been purchased in Brisbane, with construction planned to get
underway late 2012 for a super-site incorporating warehousing and freight
distribution.  The Adelaide leased facility has also been purchased, with an
upgrade due to commence mid-year.

Our Warehousing operations have recorded significantly improved performance,
both financially, and operationally for our customers. Utilization is much
improved and recent sales success will see a requirement for additional
facilities in the medium term. As with New Zealand, our future facilities
will be established to food grade building standards.

Our Wharf Cartage business has expanded its branch network to include
Victoria and Western Australia.

In our Australian International business, financial performance disappointed.
 Sales revenues declined 5.1% to AU$182.21 million from AU$191.92 million,
while EBITDA improved 8.2% to AU$7.33 million. Our expectations are for
improving performance in the short term.

Revenue levels were impacted during the year with the loss of several large
FCL shipment customers, and as sea and airfreight rates deteriorated due to
over capacity in some trade lanes.

Profitability improved as more LCL freight was attracted to our container
consolidation programme, and cost structures were managed better to offset
the revenue decrease.

Perishable facilities have been established in New South Wales to complement
our existing Victorian and New Zealand investments.

Asia (US$)
Our Asian operations performed poorly by our standards in this past year.
Whilst revenue levels improved 8.9% to US$28.87 million, EBITDA was down
15.9% to US$2.14 million from US$2.54 million in the year prior.

Operating gross margins declined as ocean freight rates fell with excess
capacity in key trade lanes, and due to an over-commitment to airfreight
space as peak season airfreight volumes never eventuated.

To counter this under-performance, we are developing sales capability within
Asia to stimulate and gain more in-country sales revenue.

China expansion this year has seen the opening of a branch in Qingdao in
northern China, and one in Chengdu in central/western China.  This brings the
number of branches in China to ten.

Further development is required in the region for high quality, transparent
third party logistics and supply chain capability.  We expect to progress
this during 2012 and 2013.

United States of America (US$)
Our two USA business units, CaroTrans and Mainfreight, have provided modest
results for this past year.  Combined revenues increased 7.8% to US$332.30
million and EBITDA improved 42.9% to US$15.32 million, predominantly as a
result of improving performance within Mainfreight.

CaroTrans revenue declined 0.5% to US$133.35 million as lower export volumes
and declining ocean freight rates negatively affected financial performance.
EBITDA was down 1.3% to US$9.18 million as a consequence.

During the year we opened our 14th CaroTrans branch, in Seattle, which will
enable us to develop direct LCL freight services to and from key Asian cities
for our northern California customers.

Offshore growth for CaroTrans continues; the Chile operation celebrates its
first year of operation, and within Asian we now have eight branches.

We expect to establish a branch for CaroTrans in Europe in mid-2012, which
will provide a valuable beachhead for further expansion of our independent
NVOCC operations.

Mainfreight USA has lifted its operational and service levels with a
corresponding improvement in financial performance.  Revenue increased 14.2%
to US$198.94 million and EBITDA improved 333.2% to US$6.14 million from
US$1.42 million.

During the year we took the opportunity to split the Mainfreight US business
into two profit centres, Domestic and International - as we do elsewhere in
the world.  This has allowed us to bring more focus to each sector, placing
responsibility and resources where needed by creating specialist divisions.
Financial results for these sectors will be reported separately in future.
Domestic freight sales will concentrate on the FMCG sector and, while we see
volumes increasing, we are operating in a very large market and have much to
do to realise the full potential available.

The International division is finding momentum and has a significant focus on
growing the trade lanes between the USA and our Asian and European
operations.  We expect to open International branches in Mexico City, Mexico
and Toronto, Canada later this year.

Europe (Euro EUR)
We have now completed one full year of ownership of the Wim Bosman business.
During this time we have been able to integrate Mainfreight's financial
disciplines and begin the process of aligning our new team members to
Mainfreight's culture.

Financial performance has not met expectations.  Revenue levels were
improved, up 2.7% to EUR244.80 million, however EBITDA reduced 15.0% to
EUR16.49 million.  (These results reflect trading from 1 April 2011 to 31
March 2012).

The settlement terms for this acquisition included an earn out incentive for
the period 1 January 2011 to 31 December 2011, predicated on achieving a
EUR20 million EBITDA result.  This added an additional EUR10 million to the
acquisition price.  The EBITDA achieved for this period was below the minimum
of EUR18.33 million, therefore no earn out payment will be made.  The accrual
has been written back as a non-recurring gain.

Factors impacting financial performance, particularly during the second half,
included:
o The loss of Logistics customers to highly competitive tenders
o Poor performance within our Belgium and Air & Sea operations.

Regardless of this financial performance, we remain satisfied with our first
European investment.

In addition to developing our understanding of European logistics and the Wim
Bosman Group, we have also:
o Established a branch in Lyon, France, a full truck lot operation in Poland;
and offices in Hamina, Finland and Moscow, Russia
o Reduced our Belgian transport hubs from three to two for logistics
efficiency, and
o Commenced the process of rationalizing our agency relationships throughout
Europe.

Three building projects have been completed:
o A new warehouse in Ostend, Belgium,
o An extension to our facility in Paris, France, and
o A 5,000m2 extension to our Romanian warehouse.

We have also restructured the Air & Sea business, implementing new
operational software, branch and senior leadership changes, and have expanded
our network with new branches in Paris, Brussels and Amsterdam (Schiphol).

Across the European group we have also addressed our sales strategy and
effectiveness, and as a result have gained significant new business.  Five
major logistics accounts will assist Netherlands' warehouse utilization to
return to pre acquisition levels by mid-2012.

The customer relationships we have inherited are also providing more
opportunities across our global network.

Our challenge will be to capitalise on these in the coming years.

Group Operating Cash Flows
Operating cash flows were NZ$77.14 million up from NZ$71.78 million, largely
as a result of operating profit improvements.

During the year net capital expenditure totalled NZ$81.88 million.  Property
development accounted for NZ$58.83 million of this.

Dividend
The Directors have approved a final dividend of 14 cents per share fully
imputed at the 28% company tax rate, with the books closing on 13 July 2012;
payment will be made on 20 July 2012.  This takes the full dividend for the
year to 26 cents per share; a 30% increase year on year.

Outlook
Our overall performance in these past twelve months has met our expectations.
 We would have liked to have had better results from our International
divisions, particularly those located in Asia, USA and Europe. We are
however building a 100+ year business, and the time we have been present in
those countries is only a short interval when compared to this expectation.

Our geographical spread across different countries and economies is assisting
our ability to consistently deliver improved results, with stronger economies
at times offsetting poor divisional or regional economic performance.

Our vision is set on long-term success, not quarterly results.

Our operations in New Zealand and Australia have become our biggest profit
generators for the short-term, but are likely to be surpassed as we redouble
our efforts in the Northern Hemisphere.

Trading through April and May has continued the past year's trends for
Australia, New Zealand and the USA.

In Asia, trading has been inconsistent and disappointing.
In Europe, April trading in our Transport divisions was improved on the year
prior, however with five fewer working days due to public holidays, May
trading has disappointed.  Improved results from our Logistics and Air & Sea
divisions are not expected until July 2012 as business from new warehousing
customers commences.

We remain optimistic with positive expectations for continuing improvement
across the Group through 2012 and 2013, albeit with ongoing vigilance towards
poor economic trading conditions around the world.

Mainfreight will release its financial results for the first quarter of the
2013 financial year to the market on 9 August 2012.

For further information, please contact Don Braid, Group Managing Director,
telephone +64 9 259 5503, +64 274 961 637 or email [email protected].
End CA:00223385 For:MFT    Type:FLLYR      Time:2012-05-30 08:30:29