Freightways Ltd: 2010 Full Year Profit Analysis

The Full Year 2010 Freightways Ltd [FRE.NZX] Profit out this morning is a case of steady as she goes, with a few points to elaborate on along the way.

The 2010 full year net profit of $23,164 million is down by 33% (after a one-off $5.7 million balance sheet tax charge due to recent Government tax changes) on the 2009 result and is 2% down on last year if the tax change is excluded.


Revenue was down by 3% to NZ $328,469 million, indicating a flat economy.

A dividend of 7c is to be paid compared with last years 8c, so little attention has been made to keeping cash within the business. Very important at this time in my not so humble opinion.

Financing costs for a sizable company debt have also been considerable but a capital raising from earlier last year has been used to pay down some bank debt so this cost was lessened for the period.

In comments about capital management, nothing was said about the sizable dividend being paid when profit is down. The company should focus on paying down debt instead of a generous dividend and it should have been cut by more than it has. Other companies have done this during 2009 and will again in 2011 and for Freightway's management not to address this is poor considering economic constraints surrounding listed company spending.

The courier businesses have again been hit the hardest, while the company's purchase of document management businesses over the last several years continues to pay off as these are achieving growth and management indicate this will continue through 2011.

Freightway's management are cautious about company prospects for the coming year but indicate another tough year ahead and a focus on costs savings as things remain flat. Given economic uncertainty I would have to say that business operations and therefore revenue will probably remain subdued over the 2011 period. This is without taking into account another possible dip in the economy. Profit levels will depend strongly on cost savings until the New Zealand economy bounces back and real growth for the company can return.

Overall, the full year 2010 result has been a good indicator of a patchy 2009 and an indicator that there is more uncertainty to come for Freightways. The same can also be said about the New Zealand economy as a whole.

8 out of 10.

Disc I own FRE shares in the Share Investor Portfolio

Freightways @ Share Investor

Long Term View: Freightways Ltd
Freightways Ltd: 2010 Half Year profit commentary
Freightways Ltd: 2009 Full Year profit commentary
Freightway's Capital Raising more of the same crap for small shareholders
Long VS Short: Freightways Ltd
Freightway's keeps delivering
Why did you but that stock: Freightways Ltd
Freightway's delivers
Freightway's packages up a good result

Discuss FRE @ Share Investor Forum

Download FRE company Reports


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c Share Investor 2010

Profit Announcements: 16 - 20 August 2010

With the following companies announcing their profit results this week, with Freightways Ltd [FRE.NZX] kicking off the week at 10.00am this morning. Investors will not only be looking for some decent results but as usual and more keenly will be looking at indicators from management as to where they may be heading in 2011.

	Issuer	Period	Expected Release Date
	Freightways Limited [FRE.NZX]	Full Year	16/08/2010
	The New Zealand Refining Company Ltd [NZR.NZX]	Half Year	17/08/2010
	Fletcher Building Ltd[FBU:NZX] Full Year 18/08/2010 NZX Limited [NZX.NZX]	Half Year	17/08/2010
	SkyCity Entertainment Group [SKC.NZX]	Full Year	17/08/2010
	Port of Tauranga [POT.NZX]	Full Year	19/08/2010
*	Downer EDi Limited	Full Year	19/08/2010
	Contact Energy Limited [CEN.NZX]	Full Year	20/08/2010
	Australia and New Zealand Banking Group Limited [ANZ.NZX]	Full Year	20/08/2010

I will be paying interest to FRE and SKC especially as they are major parts of the Share Investor Portfolio but also looking closely at NZR, POT and CEN.

The Freightways result is a good bell-weather for the wider economy, POT will indicate how exports are doing, the NZR result will give shareholders there an indicator of whether that company has or will make it out of their recent slump in fortunes. The CEN result will be indicative of wholesale power prices and their impact on the consumer and the SKC one will outline a number of issues currently on the horizon for the company.


Related

Full list of coming results - NZX Market Diary


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c Share Investor 2010

Long Term View: Best Stocks from the Series

In the Long Term View series (see links to each individual stock at the bottom of this post) of posts I have looked at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns included dividends and tax credits and other relevant details.

The calculation of return is based on available data and may vary from stock to stock. An absence of data usually means a better return than I have calculated will be the case.

In each individual post the differences will be pointed out.

I have been surprised by the spectacular returns from some and not so surprised by the dismal returns of others but have learnt, once again, that the best returns come from holding good stocks for a long period.

My ideas on stocks as one of the better long-term investments have been reinforced by this series.

Below are rankings in the series from number one down to the bottom in terms of annual returns. Click on company name for more detail on returns.


Long Term View Series Ranking


1. New Zealand Refining Ltd [NZR.NZ] Over 21 years of available data NZR has returned 7800%, an annual return of just over 371%.

2. Port of Tauranga Ltd [POT.NZ] Over 18 years of available data POT has returned over 1475%, an annual return of just over 81%.

3. = Ryman Healthcare Ltd [RYM.NZ] Over 11 years of available data RYM has returned over 680%, an annual return of just over 60%.

3. = Mainfreight Ltd [MFT.NZ] Over 14 years of available data MFT has returned over 830%, an annual return of just over 60%.

5. Sanford Ltd [SAN.NZ] Over 22 years of available data NZR has returned over 895%, an annual return of just over 40%.

6. Sky City Entertainment Group Ltd [SKC.NZ] Over 14 years of available data SKC has returned over 540%, an annual return of just over 38%.

7. Auckland International Airport [AIA.NZ] Over 11 years of available data AIA has returned over 400%, an annual return of just over 36%.

8. Ebos Ltd [EBO.NZ] Over 13 years of available data EBO has returned over 455%, an annual return of just over 35%.

9. Freightways Ltd [FRE.NZ] Over 6 years of available data FRE has returned over 190%, an annual return of just over 31%.

10. The Warehouse Group Ltd [WHS.NZ] Over 16 years of available data WHS has returned over 500%, an annual return of just over 30%.

11. = Telecom New Zealand Ltd [TEL.NZ] Over 18 years of available data TEL has returned over 450%, an annual return of just over 25%.

11. = Telstra Corp Ltd [TLS.NZ] Over 12 years of available data TLS has returned over 300%, an annual return of just over 25%.

13. Pumpkin Patch Ltd [PPL.NZ] Over 6 years of available data PPL has returned over 125%, an annual return of just over 20%.

14. Contact Energy Ltd [CEN.NZ] Over 11 years of available data CEN has returned over 200%, an annual return of just over 18%.

15. Sky Network Television Ltd [SKT.NZ] Over 13 years of available data SKT has returned over 215%, an annual return of just over 16%.

16. Metlifecare Ltd [MET.NZ] Over 16 years of available data MET has returned over 540%, an annual return of just under 16%.

17. Delegats Group Ltd [DGL.NZ] Over 4 years of available data DGL has returned 50% an annual return of 12.5%.

18. Fisher & Paykel Healthcare Ltd [FPH.NZ] Over 8 years of available data FPH has returned over 93%, an annual return of just over 11%.

19. = Goodman Fielder Ltd [GFF.NZ] Over 4 years of available data GFF has returned over 30%, an annual return of just under 7%.

19. = Hellaby Holdings Ltd [HBY.NZ] Over 16 years of available data HBY has returned over 30%, an annual return of just under 7%.

21. Restaurant Brands Ltd [RBD.NZ] Over 13 years of available data RBD has returned over 60%, an annual return of just under 4.5%.

22. Briscoe Group Ltd [BGR.NZ] Over 9 years of available data BGR has returned over 21%, an annual return of just over 2.33%.

23. Fisher & Paykel Appliances Ltd [FPA.NZ] Over 8 years of available data FPA has returned over 11%, an annual return of just over 1.37%.

24. Air New Zealand Ltd [AIR.NZ] Over 8 years of available data AIR has returned over 6%, an annual return of just over 0.75%.

25. AMP Ltd [AMP.NZ] Over 12 years of available data AMP has returned minus 50%, an annual return of just over minus 4%.


Disc I own AIA, BGR, FPH, FRE, GFF, MFT, PPL, RYM, SKC, WHS shares in the Share Investor Portfolio


Download Company Reports from the Long Term View series






c Share Investor 2010

NZX's Top 10 Dividend Returns

It is hard to get good returns from term investments and the property market at the moment with around a 3.5% real return from the former and similarly low results from investment properties, if you bought a house over the last 10 years.

The New Zealand Stockmarket has some good returns on selected stocks many are getting close to a 10% gross return. With this in mind lets take a look at the 10 best dividend players listed on the NZX.

Figures are gleaned from the NZX website and are based on figures calculated from market prices as of close of market on 9 June 2010. The gross returns are based on past profit performance.


The Top Ten

Telecom NZ Ltd [TEL.NZ] - 13.26%

Steel & Tube Holdings [STU.NZ] - 11.92%

Kiwi Income Property Ltd [KIP.NZ] - 9.92%

Vector Ltd [VCT.NZ] - 9.35%

Hallenstein Glasson Holdings [HLG.NZ] - 9.22%

Telstra Corp [TLS.NZ] - 9.08%

Freightways Ltd [FRE.NZ] - 8.41%

Air New Zealand [AIR.NZ] - 8.28%

Goodman Fielder Ltd [GFF.NZ] - 7.82%

Restaurant Brands Ltd [RBD.NZ] - 7.76%


While not guaranteed returns - the likes of TEL, TLS, KIP & AIR dividends will be under future pressure - even the minimum return from RBDs 7.76% is nearly twice the return of term investments and investment property.

Good to see I own 5 out of the top 10.

Disclosure I own FRE, GFF, HLG, KIP, STU in the Share Investor Portfolio


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c Share Investor 2010

Long Term View: Freightways Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO.

The calculation of returns includes dividends and tax credits.

Freightways Ltd [FRE.NZ] has been very good to its shareholders in terms of returns since its forerunners establishment in 1964 - we will only be looking at the last 6 years of available data since FRE was listed in September 2003 at $NZ1.60 . With $NZ 1.17 cents in net dividends (see chart above) paid and another 33% of that figure gained for those eligible for associated tax credits, a slightly more than 190% return (see chart below for the share price percentage gain against the average of all NZX indexes) over the 6 year available data gives an approximate annual net return of just over 31%.

This is approximately double the return compared to the average of all NZX indexes.




Disclosure I own FRE shares in the Share Investor Portfolio

Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Metlifecare Ltd
New Zealand Refining Ltd
Port Of Tauranga Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Telecom NZ Ltd
Telstra Corp Ltd
The Warehouse Group Ltd


Freightways @ Share Investor

Freightways Ltd: 2009 Full Year profit commentary
Freightway's Capital Raising more of the same crap for small shareholders
Long VS Short: Freightways Ltd
Freightway's keeps delivering
Why did you but that stock: Freightways Ltd
Freightway's delivers
Freightway's packages up a good result

Discuss FRE @ Share Investor Forum

Download FRE company Reports


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c Share Investor 2010