Tis merely a blip in the ocean one could say about today's announcement of profit for the Mainfreight Group [MFT.NZ]
Which mean all the expense was done in the previous half, new or extended warehouses in Auckland, Hamilton, Christchurch, Melbourne, Brisbane and the revenue failed to come in the second half - its already picking up in October and November.
Its just a matter of time and time has already added about NZ$100 million to revenue.
Revenue in New Zealand rose 5.9 percent to about $271 million and earnings before interest, tax, depreciation and amortisation fell 3 percent to $29 million, but the company doesn't expect overhead and wage costs will need to rise further as volumes increase.
In Australia, sales rose 5.2 percent to A$248.6 million, while Ebitda fell 14 percent to A$13.2 million. The performance of its domestic transport business in Australia "was well below our expectations", contributing to the "less-than satisfactory" 26 percent drop in first-half Ebitda.
"Overhead cost increases, a declining gross margin and poor sales growth were all factors affecting the result," it said.
It should concentrate on sales growth for the following half.
In the Americas, its Mainfreight USA business lifted first-half sales by 16 percent to US$155.4 million, while Ebitda fell 13 percent to US$4.96 million. Its air and ocean business recorded 32 percent sales growth and 27 percent earnings growth. That was offset by weaker earnings from domestic operations, where sales rose 2.9 percent and Ebitda dropped 37 percent, reflecting expansion of its line-haul routes and new logistics warehouse facilities in Los Angeles, Dallas and New Jersey.
This is part of the cost that I mentioned earlier and a really exciting part of the growth seeing these towns come under the Mainfreight wing. Just like New Zealand did all those years ago. You will see untold growth coming from these areas, especially Dallas, which I have an interest in.
Mainfreight reported improved results in Europe, with sales edging up 0.7 percent to 130.8 million euros and earnings gaining 14 percent to 5.9 million euros. It posted an improved performance from its European forwarding and transport operations, helped by a turnaround in its Belgian business. Its logistics operations "continue to show progress, and it noted "good momentum" in air and ocean. Those trends were expected to continue through the second half.
The Euros always have been an anathema to me but they will eventually come right, Mainfreight will tell you themselves they paid way too much for it.
I believe the Mainfreight business is in fine form, just going over one of the many bumps in the road on the way to the 10 billion in 10 years.
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