Mainfreight – Half Year 2019 Presentation

MAINFREIGHT LIMITEDHALF YEAR RESULTTO SEPTEMBER 2018

Page 2
Result Summary
Revenue up 16.8% to $1.43 billion(excluding foreign exchange effect, up 13.2%)An increase of $205.41 millionEBITDA at $108.34 million, up 22.1%(excluding foreign exchange effect, up 19.3%)An increase of $19.58 millionNet surplus after tax before abnormal items up 30.7% to $55.90
million
Trading through October, and into November continues current tr
ends
It is our expectation that pre-Christmas volumes will be strong
across
our global network
REVENUEREVENUE
EBITDAEBITDA
NET SURPLUSNET SURPLUS
OUTLOOKOUTLOOK

Page 3
First Half 2019 Review
Satisfactory performance from all five regions

Sales growth strong; new business and growth from existing cust
omers

New Zealand domestic network –resumption of full rail access

Improvement in profit contribution from Air & Ocean divisions

New Zealand & Australia contended with higher overheads

Salary increases, for those at the lower end of pay range

Software implementation (Australia Domestic Transport)

Page 4
Dividend
Interim dividend of 22.0 cents per shareBooks close 7December 2018; payment on 14 December 20183.0 cent increase on prior year’s interim dividend reflecting i
mproved
profitability and confidence for full year result
DIVIDENDDIVIDEND

Page 5
Capital Management
NZ$ MILLION
THIS YEAR LAST YEAR
Operating cash flow
71.00
57.15

Net capital expenditure totalled $40.19 million; of which $21.1
4 million is property
development and $7.96 million is software development

Expected full year capital expenditure ~$148 millionOn track with signalled land and property developments for 2019
/2020

Page 6
Half Year Analysis: Revenue
$000
THIS YEAR LAST YEAR VARIANCE
NewZealand: NZ$
343,120 316,867
8.3%

Australia: AU$
341,703 292,914
16.7%

USA: US$
237,154 203,058
16.8%

Asia: US$
40,333
37,612
7.2%

Europe: EU€
182,329 162,511
12.2%

Total Group: NZ$
1,430,994 1,225,583
16.8%

(excl FX) 13.2%


Page 7
Half Year Analysis: EBITDA
$000
THIS YEAR LAST YEAR VARIANCE
NewZealand: NZ$
45,426
38,446
18.2%

Australia: AU$
22,518
20,829
8.1%

USA: US$
10,990
8,442
30.2%

Asia: US$
3,172
2,025
56.6%

Europe: EU€
10,405
8,403
23.8%

Total Group: NZ$
108,342
88,766
22.1%

(exclFX) 19.3%


Page 8
New Zealand

Revenue growth across all three divisions

EBITDA improvements in Domestic Transport and Air & Ocean; Logistics at similar levels to prior period

Transport

Regional growth and profita
bility a highlight of the result

Resumption of Main Trunk Line ra
il service has assisted over
the year prior,although still constrained

Owner driver rate increases to take effect November 2018

Further KiwiRail rate increases to take effect early in 2019
Revenue: NZ$343m 8.3%EBITDA: NZ$45m 18.2%

Page 9
New Zealand

Air & Ocean

Steady revenue and EBITDA improvements

Regional development and contributions are a highlight; expect to replicate this offshore

Southeast Asian volume via Mainfreight network vs agencies

Improved chiller facilities post-result to capture more perishable freight opportunities

Logistics

Increased lease costs on additional sites kept profit on par with prior period

Planning underway for new Hamilton warehouse

Page 10
Australia

Strong revenue growth across all three divisions

EBITDA improved –however impacted in first half by:

Increased overheads (labour, building leases)

Gross margins predominantly steady on year prior

Transport

Increased labour costs fully absorbed heading into 2
nd
half

More emphasis on multi-modal transport (rail, coastal)

Stronger growth expectations for Chemcouriers

Expect to develop 2
nd
cross-dock in Brisbane

Regional expansion continues; Tasmania imminent
Revenue: AU$342m 16.7%EBITDA: AU$23m 8.1%

Page 11
Australia

Logistics

EBITDA improvement; despite short-term lease requirements to cope with growth

Large Sydney site ready year end (Kookaburra Rd, Prestons)

Planning underway for additional Melbourne site at Epping

Current growth rate will require additional 50,000m
2
by 2021

Air & Ocean

Better revenue growth; however gross margins under pressure

Strong focus on developing stronger airfreight presence

Southeast Asian outbound volumes consolidating in Mainfreight network vs agencies

Enhanced chiller facilities in Sydney post-result will help perishable airfreight growth

Page 12
The Americas

Revenue levels improved in all 3 divisions

EBITDA increase driven by marked improvement in Transport and Logistics; Air & Ocean EBITDA impacted by margin pressure

Domestic Transport

Finally a breakthrough in LCL
development across our top
6 locations, bringing improved performance

New cross-docks in New Jersey & Toronto assisting

Strong emphasis on improved quality to support growth initiatives
Revenue: US$237m 16.8%EBITDA: US$11m 30.2%

Page 13
The Americas

Logistics

Better profit contributions from 4 of the 5 warehouses

Utilisation high in Los Angeles & Newark

New warehouse in Chicago a significant improvement on previous facility

Sales growth rates strong and likely to provide momentum to additional facilities

Air & Ocean

Excellent sales growth, however EBITDA impacted by poor margins

October/November have seen margins improve slightly

Expect year end profitability to be improved

Trade sanctions on eastbound trans-Pacific not yet affecting ourvolumes

Page 14
The Americas

CaroTrans

Strong focus on sales has seen revenues improve

EBITDA result assisted by better margin management

Container utilization

Improved inland repositioning cost management

Page 15
Asia

Growth in both inter-company (MFT network) andin-country sales saw revenues improve

Including inter-company sales, growth was 17.3%

Better cost control and margin management assisted EBITDA improvement

Inter-Asia growth and improved trade with Europe continuing

Opened in Malaysia, post-result

Japanese business licences approved; expect to be operating early in the New Year

Singapore trade-lane development operating very well for Mainfreight network
Revenue: US$40m 7.2%EBITDA: US$3m 56.6%

Page 16
Europe

Revenue & EBITDA improvement aided by good performance from Air & Ocean and Transport

Forwarding/Transport

Improved gross margins assisting

Belgium cross-dock challenges remain

Genk improving

Ghent, a work in progress

New facilities are a vast improvement

Logistics

Development of new sites and new customer implementations saw EBITDA result dip slightly

Zaltbommel warehouse in Netherlands to implement customers from December 2018
Revenue: EU€182m 12.2%EBITDA: EU€10m 23.8%

Page 17
Europe

Air & Ocean

Sales growth pleasing

Sales pipeline initiatives very good

Developing bigger sales team

More to do to improve returns in Germany and Belgium

Asia trade-lane development pleasing

Page 18
Land & Building Development Update
Total Land & Buildings expenditure to Sep-18
$21.1 million

Expected year-end spend
$103.0 million
Of Note:
New Zealand

Land purchase West Auckland completed post-result

Mt Maunganui site development ongoing –Jan-20 completion

Australia

Land purchases in Adelaide and
Melbourne (x2) expected in 2
nd
half

Logistics Sydney –Dec-19 completion of facility (leased)

Europe

Born, NL warehouse –completed and operational

Zaltbommel, NL warehouse –Dec-18 completion

Page 19
Group Outlook
Pleasing contributions from all regions; pre-Christmas freight
volumes strong

Second half prior period stronger
than first; therefore improve
ments may be muted
compared to first half

Infrastructure investment continues to improve facilities and f
urther intensify
network development

Expect ongoing development of global network as opportunities p
resent

Key areas of development and focus include:

LCL freight growth for Air & Ocean –both modes

Improvement of profitability per m
2
throughout all Logistics warehouses

Business culture strengthening in USA/Europe

Sales growth in all 5 regions

Ongoing cross-selling to customers for additional products and
regions

Page 20
Financial Calendar F19/F20
DATE
F19–12 months ended 31 March 2019
28 May 2019
Annual Meeting of Shareholders
30 July 2019
F20 –6 months ended 30 September 2019
13November 2019