Freightways Ltd: 2010 Half Year profit commentary

The half year profit to December 31 2010 that came out this morning from Freightways Ltd [FRE.NZ] is a clear indication that life is not only tough for the company but it also shows that the economy as a whole is still in the doldrums and shows little sign of positivity.

Revenue was down by 7% to NZ $164.9 million and net profit after tax down by 15% to just over $14.45 million.

A healthy dividend of 7c is to be paid compared with last years half of 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 this period.

In comments about capital management, nothing was said about the sizable dividend being paid when profit was down. The company is borrowing heavily to fund this dividend and it should have been cut by more than it has. Other companies have done this during 2009 and will again in 2010 and for Freightway's management not to address this is poor considering economic constraints surrounding listed company spending.

The courier businesses have 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 even when other parts of the the company have slowed.

Naturally management are cagey about company prospects for the coming year given economic uncertainty but I would have to say that business operations and therefore revenue will probably remain down over the rest of 2010 and into 2011. Profit levels will depend on cost savings until the New Zealand economy bounces back and real growth for the company can return.

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



Investors have reacted by marking down shares by 11c to $3.10 this morning at time of writing.

7.5 out of ten.


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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
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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

Long Term View: Auckland International Airport Ltd

In this new 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.

Starting at the beginning of the alphabet I am going to work my way down and see which NZX company comes off looking the best. I already have my own ideas in the back of my head as to which is the best long-term return on the NZX but will keep it to myself until I reach them.

Auckland International Airport [AIA.NZ] has treated shareholders well in terms of returns since its NZX listing in 1999. With 72 cents in net dividends (see chart above) paid and another 33% of that figure gained for those eligible for associated tax credits, an approx 400% return (see chart below for the share price percentage gain against the average of all NZX indexes) over the 11 year listing gives an approx annual net return of 36%.

This is nearly 4 times better than the return from the average of all NZX indexes.



Disc I own AIA shares


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

Auckland International Airport @ Share Investor

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Cullen's move on Auckland Airport has far reaching effects
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AIA profit stays grounded
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What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
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The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Discuss this Stock @ Share Investor Forum - Register free
Download AIA Company Reports




c Share Investor 2010

NZX sneaks out embarassing carbon disclosure after dark

In an announcement sneaked out after market close on Friday 12 February (the day traditionally used by companies to hopefully hide embarrassing and bad news) The New Zealand Stock Exchange Ltd [NZX.NZ] has indicated that it has had to write down the value of a "performance payment" from the sale of its carbon registry, TZ1 last year.

Curiously the NZX valued this payment at $ US 37.1 million (seems quite arbitrary considering there is no set "value" for a "carbon credit") but have now decided to write this down to another arbitrary figure of US$21.4 million.

So, the NZX have been winners and losers in the carbon credit lark. They sold to some poor sucker at the height of the scam and lost out by missing on a performance bonus.

An interesting finish to the NZX release today:

In spite of tough operating conditions, the TZ1 registry business continues to lead the field in customer acquisition worldwide. As such it is very well-placed to benefit when the carbon agenda, and corporate willingness to commit voluntary spend in this field, return. The past 12 months was a planned, intensive growth phase for the carbon registry business, and that growth has been slowed by macro headwinds. NZX remains confident around the long-term success of the this business.

They admit that the carbon trading business is an "agenda", it is indeed one of those, a political one used by people like the folk at NZX to make money from thin air but they say they are also confident that the business will be a long-term winner.

I would have to argue again that this statement seems a little confusing because they sold TZ1 in the first place and it also looks to be collapsing into itself in a heap of smelly shareholder losing red ink on the NZX balance sheet.

I have to say, in terms of disclosure by the NZX and Mark Weldon, to be this sneaky about releasing this information, it sets a very poor example for the listed companies that it manages on behalf of shareholders and goes to show when you mess with an "investment" that is based on fraud and when you don't understand that investment, you can quickly come unraveled.

NZX shareholders are the big losers here and there will be more losses to come as carbon trading continues to unravel.

Related Share Investor Reading

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c Share Investor 2010

Stock of the Week - Reprise 2 : Contact Energy Ltd

Contact Energy Ltd [CEN.NZ] was a Stock of the Week pick back in November and I picked it then because the share price was heading below 6 bucks, similarly in June 2009, and there seems to be some resistance to the stock price falling too far past the $5.50 mark and that is why I have included it again.

The stock has retrenched below $6 5 times over the last 12 months and has always retraced back above that mark. As high as just over $6.50 on one occasion. I have a gut feeling though that the $5.50 low is going to be tested. Too much negativity based on bad news to come surrounding the company.

This time the stock has been sold off due to bad news coming this reporting season and was given added downwards impetus when management announced a price increase for customers yesterday. Usually a reason for stocks like this to rally in the past but negative for Contact given the impact of the last price rise to consumers and the poor way in which it was executed.

A great stock for you short termers out there and a good opportunity for those of you looking for a good company on the cheap for a long-term proposition.

Management of this company is poor but even a monkey running this company can make money.

I repeat, it could go lower than its current $5.66, with a low over the last 12 months of $5.47.

Buy on further weakness if this stock has been on your watchlist.


Contact @ Share Investor Blog

Stock of the Week - Reprise: Contact Energy Ltd
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Discuss this stock at Share Investor Forum - Register free


Stock of the Week Series

Restaurant Brands
NZ Refining
Ryman Healthcare
Mainfreight Ltd
Fisher & Paykel Healthcare
Xero Ltd
Auckland International Airport
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Burger Fuel Worldwide
Michael Hill International
Contact Energy Ltd
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c Share Investor 2010