Mainfreight – Full Year Presentation – 2018

MAINFREIGHT LIMITEDFULL YEAR RESULTTO 31 MARCH 2018MAINFREIGHT LIMITEDFULL YEAR RESULTTO 31 MARCH 2018

Page
 
2
Result Summary
Revenue
 
up
 
12.2%
 
to
 
$2.62
 
billion
 
(excluding
 
FX
 
up
 
10.6%)
An
 
increase
 
of
 
$285.3
 
million
Offshore
 
revenues
 
now
 
exceed
 
$1.95
 
billion
EBITDA
 
at
 
$215.4
 
million,
 
up
 
9.0%
Excluding
 
FX
 
up
 
7.9%
Net
 
surplus
 
after
 
tax
 
before
 
abnormal
 
items
 
up
 
8.8%
 
to
 
$112.2
 
million
Confident
 
of
 
performance
 
continuing
Significant
 
investment
 
being
 
made
 
for
 
land
 
&
 
building
 
infrastructure
to
 
satisfy
 
customer
 
growth
 
and
 
demand
REVENUEREVENUE
EBITDAEBITDA
NET
 
SURPLUS
NET
 
SURPLUS
OUTLOOKOUTLOOK

Page
 
3
Business Highlights
Satisfactory
 
financial
 
performance

Our
 
best
 
ever
 
result
 
for
 
Australia

Strong
 
contribution
 
from
 
New
 
Zealand

Gearing
 
ratio
 
reduction
 
from
 
24.8%
 
to
 
21.6%

Net
 
debt
 
reduction
 
of
 
$16.09
 
million
 
to
 
$196.85
 
million

Largest
 
ever
 
discretionary
 
bonus
 
of
 
$20.70
 
million
 
to
 
be
 
paid
 
to
 
team
 
members
 
globally

Larger
 
than
 
usual
 
salary
 
increases
 
at
 
the
 
low
 
end
 
of
 
pay
 
range
 
for
 
team
 
members
 
in
 
Australia
 
and
 
New
 
Zealand
 
(post
 
year
 
end)

Completion
 
of
 
software
 
upgrade
 
for
 
Australian
 
Domestic
 
freight
 
business
 
(subsequent
 
to
 
year
 
end)

38
 
Land
 
&
 
Building
 
projects
 
initiated
 
across
 
the
 
Group

Page
 
4
Dividend
Final
 
dividend
 
of
 
26.0
 
cents
 
per
 
share
Books
 
close
 
13
 
July
 
2018;
 
payment
 
on
 
20
 
July
 
2018
Total
 
dividend
 
for
 
year
 
45.0
 
cents
 
per
 
share,
 
increase
 
of
 
4.0
 
cents
(9.8%)
 
over
 
the
 
previous
 
year
DIVIDENDDIVIDEND

Page
 
5
Capital Management
NZ$
 
MILLION
THIS
 
YEAR
LAST
 
YEAR
Operating
 
cash
 
flow
140.2
131.2

Working
 
capital
 
increased
 
by
 
$12.8
 
million

Capital
 
expenditure
 
totalled
 
$64.7
 
million,
 
with
 
Land
 
&
 
Buildings
 
$20.1
 
million,
 
Plant
 
&
 
Equipment
 
$26.9
 
million,
 
and
 
Information
 
Technology
 
$17.7
 
million

Estimated
 
F19
 
depreciation:
 
$50.85
 
million
Major
 
items
 
of
 
Land
 
&
 
Buildings
 
include:

Sundry
 
New
 
Zealand
 
property
$9.2
 
million

Sundry
 
European
 
property
$5.6
 
million

Sundry
 
Australian
 
property
$4.5
 
million

Page
 
6
Capital Management ...
Capital
 
Expenditure
 
Expectations
 
FY19 NZ$
 
million NZ$
 
million
PropertyAucklandWhangareiBlenheimMount
 
Maunganui
Other
 
sundry
Land
Buildings
Land/Buildings
BuildingsBuildings
17.2
5.55.03.04.5 Total
 
NZ
 
35.2
Melbourne
 
(x2)
AdelaideMelbourneOther
 
sundry
LandLand
BuildingsBuildings
40.1
8.74.44.2 Total
 
AU 57.4
Netherlands
 
(x2)
Belgium
AlterationsAlterations
10.2
2.5 Total
 
EU
 
12.7
Total
 
Property
105.3
Other
45.0
Total
 
Capital
150.3

Page
 
7
Committed New Leases
New Zealand
Australia
Europe
Americas
New
 
sites
4
7
4
3
Locations
Auckland,
Mt Maunganui
Wellington
Blenheim
Sydney
Melbourne
Brisbane
Perth
Newcastle
 
Toowoomba
 
Wollongong
Netherlands
Born
Zaltbommel
 
‘s
‐
Heerenberg
Belgium
Ghent
Chicago
Newark
 
Toronto
Total rent
 
pa
NZ$1.45m
AU$9.67m
€4.28m
US$2.40m
Additional
 
rent
in
 
F19 (approx/
 
timing)
NZ$0.42m
AU$6.59m
€3.19m
US$1.91m

Page
 
8
Full Year Analysis: Revenue
$000
THIS
 
YEAR
LAST
 
YEAR
VARIANCE
New Zealand:
 
NZ$
666,156
609,238
9.3%

Australia:
 
AU$
623,765
534,995
16.6%

USA:
 
US$
436,742
436,357
0.1%

Asia*:
 
US$
83,861
63,351
32.4%

Europe:
 
EU€
335,769
291,927
15.0%

Total
 
Group:
 
NZ$
2,618,860
2,333,591
12.2%

(excl FX)
 
10.6%

*
 
Inter
‐
company
 
totalled
 
US$45.81
 
million
 
for
 
Asia,
 
down
 
from
 
US$52.35
 
million
Revenue
 
including
 
inter
‐
company
 
for
 
Asia
 
is
 
up
 
12.1%

Page
 
9
Full Year Analysis: EBITDA
$000
THIS
 
YEAR
LAST
 
YEAR
VARIANCE
New Zealand:
 
NZ$
98,633
91,021
8.4%

Australia:
 
AU$
49,922
42,315
18.0%

USA:
 
US$
19,235
18,585
3.5%

Asia:
 
US$
4,905
6,245
(21.5)%

Europe:
 
EU€
17,713
17,179
3.1%

Total
 
Group:
 
NZ$
215,416
197,542
9.0%

(excl FX)
 
7.9%


Page
 
10
Second Half Comparison: Revenue
$000
2
nd
HALF
THIS
 
YEAR
2
nd
HALF
LAST
 
YEAR
VARIANCE
New Zealand:
 
NZ$
349,289
321,692
8.6%

Australia:
 
AU$
330,852
277,345
19.3%

USA:
 
US$
233,684
210,259
11.1%

Asia*:
 
US$
46,249
31,903
45.0%

Europe:
 
EU€
173,258
155,451
11.5%

Total
 
Group:
 
NZ$
1,393,277
1,191,154
17.0%

(excl FX)
 
13.8%

*
 
Inter
‐
company
 
totalled
 
US$26.71
 
million
 
for
 
Asia,
 
up
 
from
 
US$18.81
 
million
Revenue
 
including
 
inter
‐
company
 
for
 
Asia
 
is
 
up
 
43.9%

Page
 
11
Second Half Comparison: EBITDA
$000
2
nd
HALF
THIS
 
YEAR
2
nd
HALF
LAST
 
YEAR
VARIANCE
New Zealand:
 
NZ$
60,187
53,858
8.6%

Australia:
 
AU$
29,093
26,223
10.9%

USA:
 
US$
10,793
8,773
23.0%

Asia:
 
US$
2,880
1,966
46.4%

Europe*:
 
EU€
9,310
9,529
(2.3)%

Total
 
Group:
 
NZ$
126,650
111,194
13.9%

(excl FX)
 
11.8%

*
 
Refer
 
European
 
commentary

Page
 
12
Domestic vs Air & Ocean Performance
NZ$000
THIS
 
YEAR
LAST
 
YEAR VARIANCE
VAR
 
ex
 
FX
Group
Revenue
2,618,860
2,333,591
12.2%

10.6%

EBITDA
215,416
197,542
9.0%

7.9%

Domestic
Revenue
1,586,881
1,367,510
16.0%

13.8%

EBITDA
161,744
141,797
14.1%

12.5%

Air
 
&
 
Ocean
Revenue
1,031,979
966,081
6.8%

6.1%

EBITDA
53,672
55,745
(3.7)%

(4.0)%


Air
 
&
 
Ocean
 
EBITDA
 
decrease
 
attributable
 
to
 
Asia,
 
MF
 
USA,
 
CaroTrans

Page
 
13
New Zealand

Strong
 
contributions
 
from
 
all
 
three
 
divisions

Customers
 
confident
 
in
 
utilising
 
all
 
products
 
as
 
they
 
look
 
for
 
supply
 
chain
 
efficiencies

Kaikoura earthquake
 
repairs
 
still
 
disrupting
 
road
 
and
 
rail
 
services

Longer
 
road
 
journeys
 
and
 
more
 
coastal
 
shipping
 
to
 
cover

Logistics

Momentum
 
requiring
 
extension
 
to
 
warehousing
 
footprint

Now
 
at
 
145,000m
2

Additional
 
sites
 
being
 
considered
 
for
 
Auckland,
 
Tauranga,
 
Hamilton
Revenue:
 
$666m
     
9.3%
EBITDA:
 
$99m
  
8.4%

Page
 
14
New Zealand

Transport

Sites
 
under
 
pressure
 
as
 
volumes
 
outgrow
 
capacity

New
 
sites
 
identified
 
for
 
Auckland
 
(2),
 
Mount
 
Maunganui,
 
Wellington,
 
Nelson,
 
Rotorua,
 
Blenheim
 
and
 
Dunedin

Additional
 
regional
 
sites
 
under
 
consideration
 
for
 
Whakatane and
 
Levin

Air
 
&
 
Ocean

Activity
 
steady
 
and
 
climbing

Perishable
 
volumes
 
increasing

Airfreight
 
volumes
 
improving

Imports
 
exceeding
 
exports
 
as
 
network
 
assists

Building
 
development
 
at
 
Auckland
 
site
 
to
 
cater
 
for
 
perishable
 
and
 
airfreight
 
growth

Page
 
15
New Zealand
Mainfreight
 
2Home

Volumes
 
steadily
 
improving

eCommerce /
 
fragile
 
freight delivery
 
to
 
home/business

New
 
Zealand
 
Outlook

Confident
 
of
 
current
 
momentum
 
continuing

Auckland
 
and
 
regional
 
fuel
 
taxes
 
under
 
review

Stronger
 
development
 
and
 
promotion
 
of
 
all
 
3
 
core
 
products
 
to
 
customer
 
base

Network
 
intensity
 
continues
 
with
 
more
 
regional
 
development

More
 
warehouses

More
 
Air
 
&
 
Ocean
 
sites

More
 
regional
 
Transport
 
operations
 
for
 
quicker/easier
 
delivery

Page
 
16
Australia

Best
 
ever
 
result
 
from
 
Australian
 
business;
 
best
 
improvement
 
across
 
Group
 
results

Sales
 
growth
 
from
 
all
 
3
 
divisions

EBITDA
 
improved
 
in
 
Transport
 
and
 
Logistics;
 
Air
 
&
 
Ocean
 
marginally
 
behind
 
year
 
prior

Logistics

Volumes
 
and
 
customer
 
base
 
continue
 
to
 
increase

New
 
sites
 
under
 
construction
 
and/or
 
consideration:
 
Sydney,
 
Melbourne
 
x
 
2,
 
Adelaide
 
(Brisbane
 
and
 
Perth
 
complete)

Increase
 
of
 
52,000m
2
bringing
 
total
 
pallet
 
spaces
 
to
 
187,100
Revenue:
 
$624m
     
16.6%
EBITDA:
 
$50m
  
18.0%

Page
 
17
Australia

Transport

Network
 
intensified
 
with
 
opening
 
of
 
Bendigo
 
and
 
Toowoomba;
 
Wollongong
 
to
 
follow
 
shortly

Tasmania
 
and
 
Far
 
North
 
Queensland
 
under
 
consideration

Investigating
 
other
 
modes; rail
 
and
 
coastal
 
shipping
 
to
 
reduce
 
dependency
 
on
 
road

Chemcouriers business
 
finding
 
growth

Owens
 
wharf
 
cartage
 
in
 
positive
 
territory

Air
 
&
 
Ocean

Revenue
 
improvement
 
as
 
global
 
network
 
assists

Gross
 
margins
 
disappointed

Perishable
 
development
 
continuing

Concentration
 
on
 
LCL
 
freight
 
consolidation

Page
 
18
Australia
Outlook

Current
 
revenue
 
momentum
 
expected
 
to
 
continue

Network
 
and
 
facility
 
development
 
may
 
lower
 
short
‐
term
 
EBITDA
 
growth
 
expectations
 
as
 
sites
 
become
 
operational

Implementation
 
of
 
new
 
Domestic
 
Transport
 
software
 
platform
 
successful
 
(Mainstreet)

Page
 
19
The Americas

Overall
 
result
 
still
 
disappoints,
 
but
 
progress
 
has
 
occurred

Transport
 
improving

Air
 
&
 
Ocean
 
behind
 
prior
 
year;
 
excluding
 
last
 
year’s
 
one
‐
off
 
airfreight
 
project,
 
revenue
 
improving

Logistics,
 
whilst
 
still
 
to
 
find
 
profit,
 
is
 
improving

CaroTrans revenues
 
in
 
line
 
with
 
prior
 
year,
 
EBITDA
 
down
 
9%,
 
recovery
 
seen
 
in
 
the
 
last
 
three
 
months

Transport

Building
 
expedited
 
LCL
 
freight
 
network

Six
 
key
 
cities
 
continue
 
to
 
be
 
the
 
focus
Revenue:
 
$437m
     
0.1%
EBITDA:
 
$19m
  
3.5%

Page
 
20
The Americas

Warehousing

Customer
 
gains
 
across
 
all
 
sites;
 
customer
 
enquiry
 
strong

Warehousing
 
footprint
 
increase
 
of
 
10,000m
2

Small
 
to
 
medium
‐
sized
 
businesses
 
preferred
 
to
 
big
 
box
 
retail

Air
 
&
 
Ocean

Concentration
 
on
 
Mainfreight
 
global
 
trade
‐
lanes

European
 
trade
 
development
 
pleasing

LCL
 
air
 
and
 
seafreight consolidation
 
developing
 
to
 
offset
 
FCL
 
Ocean
 
margins

Customer
 
opportunities
 
strongest
 
on
 
record

Page
 
21
The Americas

CaroTrans

New
 
leadership
 
brings
 
welcome
 
change

Well
‐
defined
 
strategy
 
to
 
improve
 
quality
 
and
 
customer
 
focus

Improving
 
sales
 
activities

Decentralised
 
approach
 
at
 
branch
 
level

Procurement
 
strategy
 
alongside
 
Mainfreight
 
Air
 
&
 
Ocean
 
assisting

Global
 
agency
 
relationships
 
improved
 
and
 
refined

Outlook

Improving
 
second
 
half
 
results
 
give
 
confidence
 
to
 
ongoing
 
improvement
 
across
 
all
 
divisions,
 
albeit
 
slow
Chris
 
Wilson,
 
CaroTrans

Page
 
22
Europe

Sales
 
growth
 
from
 
all
 
three
 
divisions,
 
however
 
EBITDA
 
performance
 
better
 
from
 
Air
 
&
 
Ocean
 
and
 
Logistics

Logistics

Core
 
sites
 
remain
 
well
‐
utilised
 
and
 
profitable

New
 
‘s
‐
Heerenberg
 
NL
 
facility
 
(Meiland)
 
yet
 
to
 
produce
 
acceptable
 
returns;
 
focus
 
is
 
on
 
utilisation
 
and
 
efficiencies
 
(transition
 
&
 
implementation
 
costs
 
affected
 
second
 
half
 
EBITDA
 
trend)

Ghent
 
BE
 
site
 
completed
 
and
 
at
 
97%
 
utilisation

Geleen site
 
replaced
 
with
 
new
 
Born
 
NL
 
warehouse
 
of
 
26,000m
2
;
 
occupation
 
currently
 
underway

New
 
FMCG
 
account
 
gained
 
requiring
 
new
 
warehouse
 
of
 
26,000m
2
at
 
Zaltbommel
 
NL
Revenue:
 
€336m 15.0%
EBITDA:
 
€18m 3.1%

Page
 
23
Europe

Forwarding/Transport
 

Two
 
new
 
cross
‐
docks
 
in
 
Belgium
Genk
 
–operational
 
and
 
reducing
 
pressure
 
on
 
‘s
‐
Heerenberg
Ghent
 
– under
 
construction,
 
occupation
 
June
 
2018,
 
to
 
replace
 
Ostend
 
(outdated
 
and
 
poorly
 
located)

Utilisation
 
improving,
 
but
 
distribution
 
margins
 
are
 
a
 
work
 
in
 
progress

Expect
 
Genk
 
&
 
Ghent
 
to
 
improve
 
returns
 
from
 
Belgium

French
 
volumes
 
and
 
profitability
 
improving

Eastern
 
European
 
branches
 
in
 
Romania
 
and
 
Poland
 
still
 
require
 
improvement
 
and
 
stronger
 
growth

Page
 
24
Europe

Air
 
&
 
Ocean

Satisfactory
 
returns
 
from
 
developing
 
network

USA
 
strongest
 
trade
‐
lane

Developing
 
airfreight
 
capability

Network
 
intensification
 
on
 
target

Italy
 
completed

Germany:
 
Hamburg
 
and
 
Stuttgart
 
to
 
come

Stronger
 
Asian
 
trade
‐
lane
 
development
 
required

Procurement
 
and
 
shipping
 
line
 
relationships
 
assisting

Control
 
of
 
freight
 
volume
 
routings
 
assisting
 
network
 
development

Page
 
25
Europe

Outlook

Expect
 
short
‐
term
 
Logistics
 
EBITDA
 
returns
 
to
 
plateau
 
as
 
new
 
sites
 
are
 
developed

Born
 
–from
 
August
 
2018
 
onwards

Zaltbommel
 
–from
 
December
 
2018
 
onwards

Air
 
&
 
Ocean
 
encouraging

Forwarding/Transport
 
volumes
 
and
 
margins
 
are
 
key
 
to
 
stronger
 
profit
 
improvement

Page
 
26
Asia

Inclusion
 
of
 
inter
‐
company
 
revenue
 
adjusts
 
revenue
 
increase
 
to
 
12.1%

EBITDA
 
result
 
poor
 
as
 
gross
 
margins
 
decline

Senior
 
leadership
 
change
 
effective
 
mid
‐
year:
 
Cary
 
Chung,
 
Hong
 
Kong
 
national,
 
US
‐
educated

Core
 
strategy
 
–sole
 
focus
 
on
 
Air
 
&
 
Ocean
 
for
 
near
 
term

HK
 
warehouse
 
– elimination
 
from
 
P&L
 
from
 
June
 
2018;
 
loss
 
making

Strong
 
sales
 
focus

Second
 
half
 
improvement
 
providing
 
confidence

Southeast
 
Asia
 
and
 
Japan
 
are
 
target
 
areas
 
for
 
further
 
expansion
 
where
 
Mainfreight
 
control
 
of
 
freight
 
routing
 
high
Revenue:
 
US$84m 32.4%
EBITDA:
 
US$5m
  
(21.5)%
Cary
 
Chung,
 
Asia

Page
 
27
Asia
Outlook

Expect
 
first
 
half
 
to
 
improve
 
over
 
year
 
prior

Greater
 
level
 
of
 
accountability
 
and
 
energy
 
within
 
Asian
 
operations

Page
 
28
Strategic Initiatives
Network
 
intensity

Locally

Globally

People

Culture

Ownership
 
/
 
disciplines

Products
 
are
 
freight
 
focused

Domestic
 
transportation

Air
 
&
 
Ocean

Warehousing
 
(Logistics)

Supply
 
chain
 
management
 
– combination
 
of
 
all

Page
 
29
Strategic Initiatives
Technology

Constant
 
development
 
of
 
our
 
customer
‐
facing
 
technology

Mainchain Ultra
 
(visibility
 
tool)

Order
 
Management
 
System
 
(OMS)

Shipment
 
Centre

In
‐
house
 
managed/developed

Uncomplicated

Long
‐
term
 
management
 
fundamentals/philosophy

Decentralised

Responsibility

Decision
 
making

Investment
 
– people
 
/
 
infrastructure

Growth

Organic
 
preferred
 
vs
 
acquisition

Page
 
30
Group Outlook
Expect
 
continuing
 
revenue
 
and
 
EBITDA
 
improvement
 
in
 
all
 
regions
Growth
 
initiatives
 
to
 
continue
Expect
 
network
 
development
 
globally,
 
and
 
by
 
country,
 
to
 
increase
Benefits
 
from
 
growth/infrastructure
 
initiatives
 
include
 
stronger
 
sales
 
and
 
earnings
 
profile
 
(short
 
term
 
impact)
Continuing
 
confidence
 
for
 
customer
 
growth
 
across
 
supply
 
chain
 
initiatives
 
–all
 
countries
2019:
 
Capex
 
of
 
$150m
2020:
 
Capex
 
of
 
$150m
 
to
 
$170m
New
 
accounting
 
treatment
 
of
 
leases
 
will
 
see
 
significant
 
capital
 
structure
 
change
 
in
 
FY20
 
(NZ
 
IFRS
 
16)
SHORT
‐
TERM
SHORT
‐
TERM
MEDIUM
 
TO
LONG
‐
TERM
MEDIUM
 
TO
LONG
‐
TERM
CAPITALCAPITAL

Page
 
31
Financial Calendar F19
DATE
Europe
 
Investor
 
Day
20 June
 
2018
Annual
 
Meeting
 
of
 
Shareholders
26
 
July
 
2018
F19
 
–6
 
months
 
ended
 
30
 
September
 
2018
14
 
November
 
2018
F19 – 12
 
months
 
ended
 
31
 
March
 
2019
28
 
May
 
2019