Analysis - Mainfreight Ltd: FY Profit to 31/03/09

Mainfreight Ltd [MFT.NZ] FY 2009 profit out today confirmed a slowdown in sales for the company and highlighted a tough environment for the coming 12 months. Having said that the current result was a good one.

Key Points:

1. Revenue increase of 39% to a record $NZ 1.27 billion (excluding forex gains up 28%)

2. Net surplus before abnormals of $NZ 40 million, on par with the prior year.

3. First half of year good growth, second very poor, indicating the full impact of the global slowdown, with a marked downturn in the last quarter.

4. A focus on cutting operating costs over the period of downturn in the business/economy.

5. A hat-tip to carbon emissions, noting they must take them into account because of political interference in this area of their business, but it is costing them.

6. Cashflow up strongly.

7. Debt increased significantly from $79.89 to $115.28 million.


The outlook for the company is uncertain and given poor economic indicators and a continued slowing performance in the latest quarter of business, profit is going to be down for the 2009/10 year.

They say this will be ameliorated somewhat by focusing on cost cutting, delaying capital expenditure and growing the business organically where they can - very sensible.

Given that the logistics business is one sector of the economy that is often badly affected during a recession, management at Mainfreight seemed to have managed the business well considering the slowdown in consumer demand world-wide and the resultant drop in export/import and local logistics being used in their operations worldwide.

8.5 out of 10 for me.

The stockmarket however has reacted negatively to this result, marking shares down 39c or 6.33% to NZ$4.59 at market close today.


Disclosure: I own MFT shares in the Share Investor Portfolio.


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