MFT Investor Day Presentation

Mainfreight: INVESTOR DAY20 June 2018

Agenda

10.15am Welcome
Don Braid

10.20am Europe
Ben Fitts

10.30am New Zealand
Craig Evans

10.40am Asia
Cary Chung

10.50am Americas
John Hepworth

11.00am Australia
Rodd Morgan

11.10am Technology
Kevin Drinkwater

11.20am People
Martin Devereux

11.30am Capital Expenditure
Tim Williams

11.40pm Summary and Q&A
Don Braid

12.00pm Depart for Bus Tour
Lunch on bus

Amsterdam
Rotterdam
Oostende
Brussels
Genk
Born
‘s-Heerenberg
Frankfurt
Le Havre
Paris
Pruszków
Katowice
Cluj-Napoca
St. Petersburg
Moscow
Kiev
Ploiesti
Lyon
London
Antwerpen
Poznań
Warsaw
EuropeBen Fitts
Milan
‘Zaltbommel
Ghent

Europe: Overview – Structure
BRANCHES TEAM MEMBERS

Forwarding & Transport
17
1,130
General Manager: Frans ZuidgeestNational Sales Manager: By Country

Logistics
6
965
General Manager: Liane PhilipsenNational Sales Manager: Hubert Kamphuis

Air & Ocean
11
136
General Manager: Jason BraidNational Sales Manager: Jake Pascoe
Total:
34
2,231

Europe: Overview – Core Business / Result Overview

Forwarding & Transport

Groupage, LTL, FTL

Serviced through own and partnered network

Warehousing:

The Netherlands, Belgium, Romania

Multi-customer sites, large amount of customer and activity var
iety

Air & Ocean:

Sea and air freight consolidation

FCL import and export

Customs brokerage

Across 10 countries

Supply chain focused

Sales growth of 15.0% (growth across each division)

EBITDA growth of 3.1%

Europe: Development Focus – Short to Medium-Term

Network development and intensification across each division

Branches of high quality closer to customers

Network capable of producing consistently strong results

Improved quality and handling efficiency

Focus on network cargo, consolidated freight

Balanced profitability

Accelerated renewal of trucks and trailers to further establish

Mainfreight branding on the road

Recruitment and development of a
n exceptional Team through the
Future Leaders program

Consolidation of recent expansion

Europe: Development Focus – Long-Term

Further expansion opportunities in Eastern Europe once Benelux profitability is acceptable

Own operations where location or volumes deem this to be logica
l

Expansion of full supply chain offer in countries where we are present with only one or two divisions

Europe: Strengths & Weaknesses
Strengths

Internal promotion, starting on the dock

Team that understand and care abo
ut the business and our custom
ers

Strong supply chain offer in NL, BE and RO benefits each divisi
on

Weaknesses

Profitability improving but still
low, particularly in Belgium

Scale in relation to market in some countries

Reliance on European network partners

Mt Maunganui
Auckland
Thames
Napier
Wellington
Nelson
Masterton
Gisborne
Whangarei
Hamilton
Rotorua
Taupo
New Plymouth
Palmerston North
Whanganui
Blenheim
Westport
Christchurch
Greymouth
Ashburton
Timaru
Oamaru
Balclutha
Invercargill
Cromwell
Gore
Dunedin
Paraparaumu
Kaitaia
New ZealandCraig Evans

New Zealand: Overview – Structure
BRANCHES TEAM MEMBERS

Transport
38
1,808
General Manager: Carl George

Logistics
13
254
General Manager: Mitch Gregor

Air & Ocean
16
210
General Manager: Nic Kay

New Zealand Sales
National Sales Manager: Rob Croft
Total:
66
2,272

New Zealand: Overview – Core Business / Result Overview

Highly specialisedwarehousing and distribution centres

DIY

FMCG

Dangerous goods

Inventory of all kinds –from open carton unit picking to full cross-docking activities

Multiple national freight networks utilisingroad, rail and sea

General freight –less than container loads (LCL)

Specialist in dangerous goods distribution

Specialist business-to-business and business-to-home delivery

Full truck load division (FTL)

Air & Ocean: Imports / Exports / Customs

Perishables

International LCL & FCL

Wholesale forwarding (CaroTrans)

Container unpack stations

New Zealand: Development Focus – Short to Medium-Term

Strengthen strategic alliances

Courier

Continue to develop our bulk agricultural / commodity sector bu
siness

Innovative equipment

Specific business focus

Continue to intensify the networ
k with Transport and Air & Ocea
n
operations

Influence freight decisions at both origin and consignee level

Expansion of our specialist business-to-home network

Whakatane and Levin identified as immediate regional opportunit
ies

Commission stand-alone Logistics operations in Wellington, Taur
anga and
Hamilton

New Zealand: Development Focus – Long-Term

Logistics -2022

Multiple locations of high density warehousing; including ambie
nt and
chilled

Inbound and outbound fed by Mainfreight

Transport -2022

Service every town and community –daily in-house

4
+
sub or joint branches converted into stand-alone branches

40
+
stand alone branch network

Multiple linehaul capability –road / rail / sea

Air & Ocean -2022

Regional expansion of branch network alongside Transport

Strong focus on developing export / import freight from within Mainfreight’s global network

Ensuring all imports are serviced via Mainfreight’s Logistics a
nd
Transport network

Increase temperature control assets to expand Perishables

New Zealand: Strengths & Weaknesses

Strengths

Comprehensive national network and service capability

Total supply chain offering

Supply chain engineering

High degree of IT competency and investment

Global reach

Continued long-term growth opportunities

Diversification of Logistics capability

Ability and reach to positively react to unexpected events e.g.

Kaikoura

Weaknesses

Industry leader responsibilities

Developing talent quickly enough to manage growth

Sourcing professional drivers

Map Page (I can insert the relevant one into your preso – Nik)
Taipei
Ningbo
Shanghai
Xiamen
Shenzhen
Hong Kong
Qingdao
Chengdu
Tianjin
Thailand
Singapore
Beijing
Kaohsiung
Guangzhou
Vietnam
ASIACary Chung

Asia: Overview – Structure
BRANCHES TEAM MEMBERS

Air & Ocean
14
263
Hong Kong TaiwanSingapore ThailandVietnam China

Logistics
312
Hong KongShanghaiSingapore

Carotrans
555

Regional Support Team
-24
General Manager: Cary ChungRegional Sales Manager: Billy Zhang
Total:
22
354

Asia: Overview – Core Business / Result Overview

Airfreight

International and Intra-Asia access

Direct BSA with direct & deferred services

Consolidation services

Seafreight

Daily full container load & less than container load services

Buyer’s & sellers consolidation

Project shipments

Customs Clearances & Inspections Expertise

Logistics Services

Contract Logistics (4PL)

Warehousing, Order Management, Order Fulfillment, Value-Added Services, Contract Logistics

Asia: Development Focus – Short to Medium-Term

Develop our sales force across ALL Asia branches including Regi
onal
Sales representation in China,
Taiwan, Vietnam and Singapore

Greater focus on Imports where most decision making is here in Asia

Intercompany focus is our first priority; Mainfreight to Mainfr
eight
network

Target verticals where there is high demand in Asia, eg Food & Beverage, Healthcare & Hi-Tech

Consolidation services for Air C
onsole and Ocean groupage withi
n
Asia

Own operations in Malaysia & Japan

Asia: Development Focus – Long-Term

Own operations in all major Asian Countries

Air & Ocean focus

To have at least 40% of Asian
team to be Commercially focused

To have all key gateway branches to be US1M+

To develop our value-added service to complement our Air & Ocean customers

Contract Logistics to become a stand-alone P&L

To develop our Asia Future Leader’s program

Continue to develop & promote our Mainfreight culture across As
ia

Asia: Strengths & Weaknesses
We have strong team in Asia, aver
age team members are with us 2
+ years

Strong operations & customer services

Our brand awareness has become s
tronger and able to compete aga
inst international
freight forwarders in this part of the world

Lack of commerciality from our Branch Managers

Not enough commercial team on the ground for day-to-day freight

Not enough depth in second tier branches

Not enough internal promotion

Charleston
Orlando
Norfolk
Charlotte
Philadelphia
Baltimore
Newark
Hartford
Boston
Albany
Toronto
Detroit
Atlanta
Cleveland
Columbus
Chicago
Milwaukee
Minneapolis
Laredo
Dallas
Houston
Miami
McAllen
Austin
Phoenix
San Diego
Mexico City
Santiago, Chile
Los Angeles
San Francisco
Portland
Seattle
Queretaro
AMERICASJohn Hepworth
San Antonio
Indianapolis
Reno

Americas: Overview - Structure
BRANCHES TEAM MEMBERS

Transport
22
285
General Manager: Shawn Roach

Logistics
581
General Manager: René van HoutumNational Sales Manager: Dallas Wymes

Air & Ocean
15
193
General Manager: Nathan ThomasNational Sales Manager: Nick Vernald

CaroTrans
14
232
General Manager: Chris Wilson

Franchises
9-
Austin, Baltimore, Boston, Hartford, Milwaukee,Orlando, Reno, San Antonio, San FranciscoTotal:
67
791

Americas: Overview – Core Business

Global logistics provider: Trans
port, Logistics (warehousing),
Air & Ocean

CaroTrans: Wholesale NVOCC –sea freight, import and export of LCL and FCL

Focus on developing everyday freight; Food grade, FMCG, DIY goo
ds

Transport provider across Nort
h America –defined day services

Developing our network within the Americas

Americas: Development Focus – Short to Medium-Term

Logistics

4 stand-alone sites that are 72% utilized; total footprint 59,5
00 m
2

Expansion into FMCG/beverage markets

Transport

New cross-docks for Newark, Toronto and San Diego

Continued expansion of line-ha
ul: 40 locations with 129 line-ha
uls with
174 legs –top six cities a priority

Owner drivers: 136. 35% of our business travels on our line ha
ul network

Air & Ocean

Developing consolidations for dedicated Mainfreight trade lanes

TSA-approved status allows loading of our own air units in Dall
as,
Chicago and Los Angeles

CaroTrans

Management changes / sales focus

Adopting Mainfreight decentralization and culture

Americas: Development Focus – Long-Term

Logistics

Will need additional site in Los Angeles and New Jersey

Transport

Continued growth in our 6 major markets will support network fr
eight
growth

Expand line-hauls and local PUD solutions across the country

Air & Ocean

Strong branch network within USA
to complement and add growth t
o
global network

Customer-focused technology –visibility/order management system

CaroTrans

Focus on capturing more significant share of the USA wholesale market

Americas: Weaknesses and Strengths
Weaknesses
Sales growth is key; momentum is building

Culture still needs to evolve
Strengths
Future Leader program now develo
ping team members into sales
and leadership roles

Logistics warehousing is a cut above opposition

Transport –quality is a key market differentiator

Air Ocean –Mainfreight-to-Mainfreight lanes key focus

We can compete against the big players and often are more attractive to use due to customer service ethic and our operational flexibility

Gold Coast
Sydney
Brisbane
Townsville
Adelaide
Canberra
Bunbury
Perth
Melbourne
Ballarat
Geelong
Albury
Newcastle
Sunshine Coast
Wollongong
AustraliaRodd Morgan
Bendigo
Toowoomba

Australia: Overview – Structure
BRANCHES TEAM MEMBERS

Air & Ocean
14
344
General Manager: Grant DraperNational Sales Manager: Brendan Ryan

Owens Transport
4
164
National Manager: Mike ReidNational Sales Manager: James Bennett

Logistics
10
309
General Manager: Simon HartNational Sales Manager: AladinBasic

Transport
27
920
General Manager: Bryan CurtisNational Sales Manager: Steve Turner

Australian Sales
AU Group Sales Manager: Dave Scott
Total:
55
1,784*
*Includes Group Team of 47

Australia: Overview – Core Business / Result Overview

Air & Ocean
Air, Sea, Import, Export -LCL & FCL, Customs, PerishablesWholesale Forwarding (CTO)

Logistics (Warehousing)
Inventory Management, Complex High Activity Pick/Pack, Food Gra
de, DIY, Hazardous,
General

Transport
Day Definite, Australia-wide LCL, Metro, Full Load, Hazardous (
Chemcouriers), Wharf
Cartage (Owens), Road, Rail, Coastal Shipping

Integration
Global Visibility, Project Logistics, Supply Chain Analysis, ED
I Business Solutions
Revenue $624M 16.6%
Sales Growth in all divisions
EBITDA $50M 18.0%
Only A & O marginally behind

Region: Development Focus – Short to Medium-Term

Air & OceanFocus on LCL. Grow margin. Develop deep Airfreight capability.
Continue
Perishable development & grow export volume beyond 24%

LogisticsConsolidate/digest recent capacity expansion. Seek complex hig
h value/
volume beverage & hazardous goods opportunitiesEvaluate technologies that can help with quality/productivity

TransportMaintain recent sales momentum. Drive margins & reduce overhea
ds
relative to Sales. Finalisenew depot design to help move more
freight with
same building size & team numbers
in same time frame. Continue
Network
growth. Develop Chemcouriers service (hazardous goods). Regain
mojo in
Sydney operations.

Region: Development Focus – Long-Term

Maintain Sales growth rate

Drive ROR beyond 8%

More rear loading & freight on rail

Further expansion of Australia
n network & quality to fit seamle
ssly with
our other global operations & customer expectations.

Build nationwide hazardous goods storage capability

People –Natural behaviours, Recruitment. Refine & develop our
Culture

75% of
Team
to have worked 2+ years in each division

Further enhance our image & presentation

Region: Strengths & Weaknesses
Perishables & Sydney Transport have lacked profitability recent
ly

Margin pressure in Air & Ocean

Transport quality needs to continue to improve along with overh
ead management

Isn’t quite the scale yet for all hazardous deliveries to be do
ne within Chemcouriers
network & still need bigger hazardous Logistics capability

Full supply chain logistics capa
bility –we own branches in most
major regions

Flat management structure & “branch manager is king” philosophy
–aids long-term
quality & profitability

Extensive & growing ground-based network with good & improving
facilities

Now well-established, respected & consolidated reputation as a
high quality provider

Team full of youth, ambition & intelligence – Our Future Leaders

TechnologyKevin Drinkwater

Global Technology : Overview

Annual spend NZ$52.2m

Total capital expenditure NZ$21.6m

Includes NZ$17.3m on software

Software developed in NZ is NZ$12.8m

119 team members globally

3 critical operational system types

Transport

Logistics: Warehouse Management System (WMS)

Air & Ocean

Critical support system types

Website

Customer Portal –Mainchain

CRM

Many other supporting systems including email

Global Technology: Critical System Overview
System Type
Region
MF Owned
Hosted
TransportMainstreet
AU/NZ
/US
Yes/Yes
NZ
Mainmove/ TREX/ NaviTrans EU
No/Yes/No
EU
Warehouse MIMS
AU/Asia/NZ/US
Yes
NZ
MarcCS
EU
No
EU
Air and OceanCargowise
Global
No
US -Cloud
CaroTrack
CaroTransUSA/ Chile
Yes
US
AccountingOnAccount
AU/NZ/USA
No
NZ
Navision
EU
No
EU
Cargowise
Global Air & Ocean
No
USA
Support Mainfreight.com
Global
Yes
NZ
MainchainMainsale(CRM)
GlobalGlobal
YesYes
NZ/EU/US
NZ

Global Technology : Core Systems

Customer Facing

Security and Processing

Operational

Support

Key Initiatives – Short to Medium Term
Risk Management
Asset Protection

Disaster Recovery Initiatives

Emerging Privacy Regulations
Software Initiatives
Transport Management Systems

Mainstreet Implementation
Complete NZ 2017, AU 2018

Stable Platform to build from

Mainmove Implementation EU –completion end CY 2019

Enhanced Customer Products

Mainchain Ultra /Mainchain OMS

Predictive Analytics

Cloud

Global Technology: Key Initiatives – Long-Term

Digitisationof Freight

Air and Ocean

Blockchain

Predictive Modeling

Mobility / IOT

Flexibility

Cloud

Reporting

Websites

PeopleMartin Devereux

Training & Development: Overview – Structure
TEAM MEMBERS

New Zealand
11
Manager: Rachel HustlerLocations: Auckland & Christchurch

Australia
14
Manager: Shona TaylorLocations: Melbourne, Sydney, Adelaide

Europe
5
Manager: Courtney BouldLocations: The Netherlands & Belgium

The Americas
5
Manager: Raewyn GlamuzinaLocations: Los Angeles & Chicago

Asia
2
Manager: Wendy NiuLocations: Guangzhou, Shanghai & Hong Kong
Total:
37

People & Development: Overview – Our role

Guardianship of our culture around the world

Attract, develop and retain talent

Develop global leaders

Champion and support workplace safety

Train our team to be excellent in all they do

Assess operational quality and cultural benchmarks

People Development Focus – Short to Medium-Term

Further development of future leader program across Asia

Gender diversity and seeing more
women in roles of significance

Development of both future leaders and operational role models

Driver academies

Being Easy to Deal With

Broadening eLearning capabilities

Stronger recruitment channels fo
r youth not choosing tertiary
educations

People Development Focus – Long Term

Focus on competence development not role development

Harnessing an ageing workforce

Creation of career pathways for youth

Facilitating global career paths

Focus on cultural awareness and
diversity i.e. better understan
ding
our brothers and sisters abroad

Driving learning and development as close to the work floor as possible and as real as possible eg. VR and Augmented Reality

Region: Strengths & Weaknesses
Weakness

Alignment of our culture worldwide

Strength

Our people investment

Capital ExpenditureTim Williams

Group Property Strategies

Invest in high quality facilities leased or owned –network inte
nsification

Understand size and location requirements before owning

Endeavour to land bank for growth –difficulties in relocating d
omestic terminals

Look to own specialisedbuildings, primarily in domestic transpo
rt

Build warehouses adjacent to freight terminals

Air & Ocean offices and stand-alone warehouses –largely generic
and can be readily
leased

Group Property Strategies – continued

NZ and Australian market well understood and priority for owner
ship

Europe and USA both require more understanding, growth and acce
ptable business
improvement

Asia is Air & Ocean and will remain leasing

Capital Management
Capital Expenditure Expectat
ions FY19 NZ$ million NZ$ million
PropertyAucklandWhangareiBlenheimMount MaunganuiOther 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 AU57.4
Netherlands (x2)Belgium
AlterationsAlterations
10.2
2.5 Total EU 12.7
Total Property
105.3
Other
45.0
Total Capital
150.3

New Zealand Capex – 2019 and 2020
New Zealand –NZ$000 PropertyCapex
FY19
FY20
Auckland -Hobsonville* Settlement of land purchase
17,233
Whangarei
Building extension & Warehouse
5,500
Blenheim
Purchase & Refurb inc Land
5,000
Mt Maunganui
New Freight Terminal
3,000
27,000
Auckland -Airfreight
New Chillers + Solar Project
2,440
Auckland -TitiStreet
Container Terminal Wharf
2,000
3,000
Nelson
New Freight Terminal on leasehold land
10,000
Wellington -Old Toll Site
#
Purchase of building & Demolition
4,000
Rotorua
%
Land
3,000
35,173
47,000
* Build not expected before 2021 year. Build cost approx$25m#
New Build not expected before 2021 year. Build cost approx$15m
%
Build not expected before 2021 year. Build cost approx$8m

Australia Capex – 2019 and 2020
Australia –AU$000
PropertyCapex
FY19
FY20
Adelaide
Land
7,967
Adelaide
Building Cost
19,000
Dandenong South*
Land
29,540
Dandenong South
Building Cost
20,000
Epping
Land
7,385
Epping
Building Cost
4,000
11,000
Leased FacilitiesLogistics -4 sites
Racking & Fitout
2,300
Transport -8 sites
Fitout/ Relocations
1,610
52,802
50,000
* Balance of estimated build cost expected to be $35,000,000 in
2021

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

IFRS 16 - Leases
Fundamentally changes the way in which lessors account for leas
es

Commences 31 March 2020 financial statements

Records a right of use asset and a lease liability for each lea
se

Lease cost in P&L replaced by depreciation of right of use asse
ts and interest on lease
liabilities

Cash flow changed to principal portion and interest portion

Modelling done on 2018 figures indicates (NZ$):

Total assets and liabilities to increase in the order of $400m

EBITDA to increase in the order of $85m

PAT will initially decrease by less than $5m

Currently no restating of prior years will be permitted

Mainfreight SummaryDon Braid

OUR GROWINGGLOBALNETWORK
BRANCHES:247
COUNTRIES:22
NZ, Australia, USA, Canada, Mexico, Chile, China, Hong Kong, Ta
iwan, Singapore,
Thailand, Vietnam, Netherlands, Belgium, France, Germany, Roman
ia, Poland,
Ukraine, Russia, United Kingdom, Italy
EUROPE
AUSTRALIA
ASIA
NEW ZEALAND
THE AMERICAS
Areas under consideration
Scandinavia
Japan
Middle
East

Network Intensification
Globally
Within Countries
Within Cities
Over Customers’ Supply Chains

3 Core Products across Supply Chain
Air & Ocean
127 million kg pa
(air) 312,000 containers pa (sea)

Warehousing
33 major sites
614,000m
2

Domestic Transport
68 million tonnes pa 77 million consignments p
a

Supply Chain Management
Combination of all

Supported With:
High quality services –measured and shared

Highly engaged people –our culture counts

Technology –visibility / uncomplicated / internally controlled

Decision-making close to the customer

Decentralised structure –management and responsibility

Customer Profile
Dry FMCG style

Food, Beverage, Retail, Consumer DIY

Some perishable (airfreight)

Regional/country specific and multi-national

More trading across borders

Trading across our products –supply chain management

Linked via intelligent and useful software

Freight focused

Infrastructure Investment
Land and buildings

2018/19
$105 million expected capital spend

Leased and owned –as appropriate

Purpose built

Image

Quality

Efficiencies

Expectations / Outlook
Continue to apply our principles of managing for the long-term

Ongoing capital investment and leasing: infrastructure to accel
erate growth

Promotion from within and adhere
nce to our culture –all countri
es

Long-term organic growth vs acquisition –preferred

Customer relationships / quality of service –key differentiator

Expect momentum to continue

Short-term impacts on (unadjuste
d) EBITDA as new sites are deli
vered through 2019/2020

Emphasis remains on strong revenue and EBITDA improvement