Thursday, May 26, 2011

Mainfreight Ltd: Full Year 2011 Profit Analysis

Mainfreight Ltd [MFT.NZ] has had a very good 2011 full year profit result considering the state of the world economy and the subsequent slow down in world trade. The result is a record one and is up 30% (before abnormals) on the 2010 full year announcement.

Key Points

1. Total revenue (sales) increased by 20% to $1.34 billion, from $1.13 billion last year

2. A net surplus after taxation and abnormals of $47.24 million for the twelve months of the 2011 financial year; an increase of 30% on the previous year’s result of $36.37 million.

3. A big focus on cutting operating costs over the period of downturn in the business/economy, with more than $32 million cut.

4. A massive increase North American revenues of 24.8% to $420.47 million and EBITDA improving 101.3% to $14.63 million.

5. Australian operations increased 20.4 % to $472.29 million from $392.33 million and EBITDA improved 14.1% to $25.63 million.

6. New Zealand operations increased 10.0% to $412.57 million from $374.97 million. EBITDA improved 8.6% to $47.86 million,

7. Asian business improving 29.8% to $36.17 million and EBITDA improving 68.7% to $3.47 million.

8. Net debt decreased to $47.55 million from $82.89 million

9. 11c dividend, increased by 10% on last year.

Management have done well to come in with a higher full year profit. They did this by cutting back fat in the business, reducing capital expenditure and improving revenue strongly across all geographical regions in which they operate.

Mainfreight have indicated to the market that they see this result as somewhat of a turning point for the company after a tough last 3 years of pressure from the fallout from the 2008 financial crises. They are especially excited about including for the first time revenue and profit from the purchase of Wim Bosman Group in March. This acquisition will clearly have a further positive impact for full year 2012.

As things have started looking up the company look to use more capital to expanbd through FY 2012.

I remain cautious but optimistic about the coming year, with global economic conditions still looking sluggish this latest result might be more of a one off rather than one the company can sustain through 2012. Having said that the additional revenue from their Wim Bosman Group purchase will have a good upside.

9.8 out of 10.

Disc I own MFT shares in the Share Investor Portfolio

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