Ann: HALFYR: MFT: Mainfreight Limited - Half Year

• Release Date: 13/11/12 10:30
• Summary: HALFYR: MFT: Mainfreight Limited - Half Year Result to 30 September 2012
• Price Sensitive: No
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MFT
13/11/2012 08:30
HALFYR

REL: 0830 HRS Mainfreight Limited

HALFYR: MFT: Mainfreight Limited - Half Year Result to 30 September 2012

MAINFREIGHT LIMITED

Financial Result for the Six Months Ended 30 September 2012 (Unaudited) &
Appointment of Director

The Mainfreight Group is pleased to report a net surplus after taxation of
$27.74 million for the first six months of the 2013 financial year; a
decrease of 4.6% on the previous year's result of $29.08 million (excluding
non-recurring items, the decrease is 6.3%).

EBITDA performance declined 5.1% to $61.06 million, down $3.31 million from
the previous year's record for the same period of $64.37 million (excluding
foreign exchange effects, this represents a decrease of 3.1%).

Total revenue (sales) increased 4.9% or $43.47 million to $936.37 million
(excluding foreign exchange effects, this represents an increase of 6.9%).

For comparison purposes, results for the period excluding the European
division saw sales revenue improve 9.8% to $742.49 million, and EBITDA
improve 15.0% to $52.73 million, an increase of $6.87 million over the same
period last year.  These increases highlight the continuing strength across
the balance of the Mainfreight global network, and of course reflect the poor
trading performance from our European operations.

The trading performance from Europe is indicative of ongoing economic
weakness in the region, coupled with the European summer holiday period.  The
loss of warehousing customers post-acquisition, as previously mentioned, has
also contributed.

Trading in New Zealand, Australia, Asia and the United States has continued
the trends of the first quarter, with revenue and EBITDA showing positive
growth and reflecting Mainfreight's improved performance across all four
regions.

Similarly, the third quarter has started strongly and includes better weekly
trading results from Europe compared to the same period last year.

Regional Performance (figures in local currencies)

New Zealand (NZ$)
New Zealand EBITDA improved 8.7% to NZ$24.19 million, compared to the same
period last year.  Sales revenues were up 5.9% to NZ$228.29 million.

Financial performance in both divisions, Domestic and Air & Ocean, is ahead
of the prior year, with Domestic sales contributing more to the result.
Trading into the third quarter continues those trends.

In our Air & Ocean division, the gaining of new business is expected to bring
an immediate benefit to revenue levels.  Logistics (warehousing) activity has
increased from the year prior with our new South Auckland facility
contributing positively, ahead of expectations.

Domestic freight performance is also ahead of the year prior, with new
facilities in Invercargill and Palmerston North expected to be fully
operational by early January 2013.  A conditional agreement to purchase
approximately seven hectares of land in Hamilton has been signed.  This land
will be rail-served, in line with Mainfreight's commitment to the use of rail
freight throughout New Zealand.

Australia (AU$)
In Australia EBITDA performance improved 22.0% to AU$13.02 million compared
to the same period last year.  Sales revenue momentum carried through from
the first quarter, up 13.3% on the previous year to AU$209.42 million.

Our Domestic Transport and Logistics operations are the significant
contributors to this performance with sales and EBITDA growth both exceeding
20%.

Improved warehouse utilisation and activity have lifted performance, and in
our Domestic Transport operations revenue growth is being driven by market
share gains.

In both instances, growth is placing pressure on facilities and at times
impacting gross margin.  The capital investments being made in Queensland,
New South Wales, Victoria and South Australia will bring welcome relief.

Our Air & Ocean operations are providing incremental increases in revenue and
EBITDA contributions.  A clear emphasis remains in place for improved air and
ocean freight volume growth, to and from the Australian market.

Trading into the third quarter continues to be strong for our Australian
operations.

Asia (US$)
Satisfactory inter-company trading (within the Mainfreight network) has
boosted EBITDA which is up 19.2% to US$1.37 million.  In-country sales
declined 4.2% to US$14.75 million and European trade remains weak; both areas
are targeted for development.

Good performances from our Southern China, Hong Kong and Shanghai branches
assisted the improved EBITDA result.

Both Airfreight and Seafreight categories are ahead, primarily in the export
sector although a small improvement in imports is encouraging and one which
we will build upon.

Trading into the third quarter has delivered further gains, although we are
yet to see peak season volumes of previous years.

United States of America (US$)
Revenues in the USA have improved 10.2% to US$182.04 million and EBITDA is up
18.7% to US$8.12 million, with the primary contribution coming from
Mainfreight USA.

Growth in the Mainfreight operations has been dominated by international Air
& Ocean sales growth and gross margin improvement.  Domestic sales, while
ahead, are up only marginally by 2.4%.
Revenues within this division are now nearly equally split between Air &
Ocean and Domestic freight.  Our first branch in Canada is now operational in
Toronto, and our Mexico City branch is expected to open in early December.

CaroTrans, our wholesale NVOCC operation, has seen EBITDA performance similar
to that of the prior year, with revenues up 3.6% to US$68.98 million.

Trading into the third quarter reflects ongoing improvement for Mainfreight
and similar year-on-year performance for CaroTrans.

Europe (Euro EUR)
Our most disappointing result, exacerbated by poor trading during the
European holiday period of August and September.  Whilst we have been able to
maintain revenue levels at similar levels to those of last year, with just a
1.4% decrease to EUR122.36 million, EBITDA has declined 50.4% to EUR5.26
million as margins reduced through poor warehouse utilisation and activity,
and poorly performing transport operations in Belgium and France.  Cost
structures have also increased as labour costs were incurred to facilitate
new customer gains in our Logistics facilities.

We expect improving margins as revenue from new customers bolsters our
Logistics and Air & Ocean divisions.  Meanwhile the focus remains on better
management of cost structures in the Transport operations.  We will continue
with strong sales efforts in our Air & Ocean business, supported by our
global network.  Eastern Europe and Russia offer further opportunity for
development and recent expansion includes branches opened in Katowice, Poland
and Kiev, Ukraine.

We maintain our confidence in the long-term benefits of our European
acquisition although we are disappointed with the financial performance over
the last six months.

Trading into the third quarter is marginally ahead of the same period last
year.

Group Operating Cash Flows
Operating cash flows were NZ$31.28 million, on par with the prior year.

Capital Expenditure totalled NZ$32.38 million, of which NZ$20.94 million
related to property development.

Dividend
The Directors of Mainfreight have approved an interim dividend of 12.0 cents
per share (remaining at the same level as that declared for the 2012 year).

This dividend will be fully imputed and will be paid on 14 December 2012,
with books closing on 7 December 2012. A supplementary dividend will be paid
to non-resident shareholders.

Appointment to Board of Directors
We are pleased to announce the appointment of Simon Cotter as a Director of
Mainfreight Limited.

Simon (45) has had a long association with Mainfreight as a director of Grant
Samuel & Associates and has personally assisted in Mainfreight's mergers and
acquisitions activity since 2003.  In addition to a comprehensive
understanding of the company and the industry, Simon brings strong financial
and analytical skills which will be of significant value and will complement
the mix of skills and experience of the existing board members.

Simon's appointment will take place effective 1 January 2013.  He will stand
for election at the Company's Annual Meeting of Shareholders on 31 July 2013.

Outlook
Whilst the half-year result has been negatively impacted by our poor European
contribution, the performance of all our other divisions remains satisfactory
and all continue to find improved sales growth and profitability.

We are confident of maintaining this growth and profitability, and expect to
see improving returns from our European interests.

As previously indicated to the market, Mainfreight has moved to half-yearly
reporting.  Our full year results to 31 March 2013 will be reported on 29 May
2013.

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:00229631 For:MFT    Type:HALFYR     Time:2012-11-13 08:30:28