Trading Update 30 October 2014

An update on the unaudited trading performance of Freightways Limited (Freightways) for the three months ended 30 September 2014 is provided below.

This 1st quarter includes 5 extra trading days compared to the prior comparative period due to a re-alignment of our accounting calendar, which occurs approximately every 5 years. The extra 5 trading days contributed approximately additional revenue of $7 million, earnings (operating profit) before interest, tax, depreciation and amortisation (EBITDA) and earnings (operating profit) before interest, tax and amortisation (EBITA) of $2 million and net profit after tax (NPAT) and NPAT before amortisation (NPATA) of $1.4 million.

Inclusive of the revenue and operating profit generated from these 5 additional trading days, revenue totalled $122 million, a 17% increase over the prior comparative period (pcp). EBITDA of $24 million and EBITA of $21 million were 27% and 31% above the pcp, respectively. NPATA of $14 million and NPAT of $13 million were 38% and 37% above the pcp, respectively.

Freightways' 1st quarter results (unaudited):

Our result represents the strongest first quarter performance the Company has experienced since 2004 and highlights once again the strength of the Freightways business model, the positive earnings leverage the Company is able to achieve in a growing market and the achievements of those working throughout Freightways' businesses. 

Express Package and Business Mail division

Inclusive of the impact of the 5 additional trading days, our express package & business mail division's revenue of $94 million was 18% above the pcp. EBITDA of $18 million and EBITA of $16 million were 33% and 36% ahead of the pcp, respectively, as follows:

Increased activity from existing customers throughout all geographies and industries in New Zealand has been further assisted by quality market share gains and some pricing improvement. New Zealand Couriers, Post Haste, Castle Parcels, NOW Couriers, Pass The Parcel, SUB60, Kiwi Express, Stuck and Security Express, have all delivered record results. Our strategy to extend DX Mail's suite of postal services, including through the acquisition of Dataprint, is also proving successful, with each of these businesses performing well ahead of the pcp.

Information Management division

Inclusive of the 5 extra trading days, our information management division's revenue of $29 million is 14% ahead of the pcp. EBITDA of $7 million and EBITA of $6 million were 18% and 23% ahead of the pcp, respectively, as follows:

Growth from existing customers and market share gains in all locations have contributed to increased utilisation of the capacity we have invested in over recent years. Following the prior year acquisition of Advance Security Destruction, we have commissioned a new document shredding facility in Sydney. We have also acquired a small Business Process Outsourcing business based in Melbourne. The services offered by this BPO business will be offered to customers throughout both Australia and New Zealand. The total initial cost of this acquisition was $2 million, and there is a future potential earnout amount of $1.8 million. First year EBITDA expectations from this acquisition, for the 10 months of our ownership, are $0.5 million.

Both our New Zealand and Australian information management businesses have recorded record results.

Corporate

Corporate costs continue to be well contained and capital expenditure remains at targeted levels with full year forecast expenditure expected to be approximately $17 million.

Freightways' financial performance over the longer term

The graphs below demonstrate the strong historical performance of Freightways:

Freightways' Operating Revenue   Freightways' EBITA   Outlook

The positive performance evident in this 1st quarter result underpins our expectation of year-on-year earnings growth in 2015, subject to business factors beyond our control.

Within our express package businesses we remain encouraged by the increased activity amongst our existing customer base, both from Business to Business (B2B) and Business to Consumer (B2C) deliveries.

Our smaller DX Mail business will continue to operate in a challenging market, despite which it is expected to continue to attract customer demand, particularly for its overnight street delivery service. Demand for Dataprint's physical and particularly its digital mailhouse services is expected to continue to increase.

The growth that we are experiencing in our information management businesses is expected to continue, including from the digital services that we offer.

Freightways will continue to seek out and develop strategic growth opportunities, including acquisitions and alliances that complement its core capabilities.

For further information contact:

DEAN BRACEWELL
Managing Director
Freightways Limited
Ph: (09) 571 9670

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