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Mainfreight first-half profit jumps 51% on Bosman settlement, Australasia, Asian growth

Mainfreight [NZX: MFT], the transport and logistics group, reported a 51 percent increase in first-half profit, helped by its settlement with the former owners of Wim Bosman and improved performance in Australasia and Asia.

Net profit rose to $41.8 million, or 41.72 cents a share, in the six months ended Sept. 30, from $27.7 million, or 27.9 cents, a year earlier, the Auckland-based company said in a statement. Sales climbed to $952.7 million from $936 million.

"Trading during the first three months of the 2014 financial year saw reduced volumes and profitability across most of the Mainfreight network, however performance through August and September improved and this has continued through October and into November," the company said in a statement from managing director Don Braid.

Mainfreight had already flagged the $12.7 million Bosman settlement, which came after the business lost key trading accounts and had to contend with poor trading conditions in the face of a European recession. Today the company said Europe remains its "most challenging" region with costs wiping out a 2 percent gain in sales, resulting in a 25 percent slump in pretax earnings to 3.97 million euros.

The Americas also continued to struggle, with sales down 2.2 percent to US$178 million, though earnings before interest, tax, depreciation and amortisation rising 3.5 percent to US$8.4 million. Its CaroTrans unit was able to lift gross margins while the performance of Mainfreight USA stalled, it said.

By contrast, its New Zealand businesses all performed strongly in the first half, with sales rising 6.5 percent to $243 million and EBITDA rose 14 percent to $27.7 million.

In Australia, where Mainfreight exited the parcel business, total sales climbed 7.1 percent to A$224 million and EBITDA rose 8.1 percent to A$14 million. Earnings growth was driven by its Air & Ocean and Logistics divisions.

While Domestic Transport in Australia struggled as it coped with the removal of parcel freight, gross margins have begun to recover, with a return to "good sales growth".

Mainfreight Asia posted a 26 percent gain in revenue to US$18.5 million and a 33 percent jump in EBITDA to US$1.82 million.

Mainfreight will pay a first-half dividend of 13 cents a share, up from 12 cents a year earlier, payable on Dec. 13 with a record date of Dec. 6. The shares last traded at $11.51 and are little changed this year. The stock has a 'hold' rating and median price target of $11.88, based on a Reuters poll.

The company said it expects to lift earnings in the current year, with measures put in place to improved trading at Mainfreight USA likely to show up in the fourth quarter, while Europe will take longer to improve.

The stronger performance seen in the second quarter for New Zealand, Australia, Asia and its Carotrans business in the US had continued through to November, it said.


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