FRE’s Craigs Investor Day Presentation

CRAIGSINVESTOR DAY PRESENTATION

A HERITAGE
THAT
STARTED
IN
1964

AGENDA
42
1
3
WHO WE ARE
TRACK RECORD
STRATEGIC
OPPORTUNITIES
PERFORMANCE OUTLOOK
INVESTOR DAY
PRESENTATION ·
23 MAY 2019

4000+
STAFF
AND
CONTRACTORS
TASKED
WITH
FINDING
OPPORTUNITIES
TO
GROW
INCREDIBLE
TENURE
OF
TEAMS
BUSINESS
OWNERS
WHO
WORK THEIR
NICHES
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
WHO
WE ARE

WHO
WE ARE
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
OFFSHORE
~
30
%
LISTED IN
2003
6800+
SHAREHOLDERS
NZ
~70
%
Shareholder Split

OUR
LINES OF BUSINESS
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
INFORMATION
MANAGEMENT
BUSINESS MAIL
EXPRESS PACKAGE
SECURE
DESTRUCTION
NEW ZEALAND COURIERS
POST HASTE COURIERS
CASTLE PARCELS
NOW COURIERS
SUB60
KIWI EXPRESS
SECURITY EXPRESS
DX MAIL
DATAPRINT
TIMG AUSTRALIA &
NEW ZEALAND
SHRED-X
MED-X
TIMG NZ

FREIGHTWAYS
ARE
EXPERTS IN
...
INVESTOR DAY
PRESENTATION ·
23 MAY 2019

INVESTOR DAY
PRESENTATION ·
23 MAY 2019
TRACK
RECORD

-
100 200 300 400 500 600 700
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$M
Year Ended 30 June
OPERATING
REVENUE
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
1H2H

-
10 20 30 40 50 60 70 80 90
100
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$M
Year Ended 30 June
NOTEThis graph represents the operating profit before interest, tax and amortisation of intangibles, exclusive of any non-recurring
items
EBITA
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
1H2H

DIVIDEND
PAYMENT HISTORY
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
0.005.00
10.0015.0020.0025.0030.0035.00
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cents Per Share
Year Ended 30 June

INVESTOR DAY
PRESENTATION ·
23 MAY 2019
STRATEGIC
OPPORTUNITIES

•
#1 by market share and industry profitability
•
B2B 75% of our volume, grows around GDP levels, stable and loyal customer base whose businesses are built around our networks
•
B2C (Residential deliveries), 25% of our business, market growing at around 10% YoY
•
Relatively consolidated market FRE, NZ Post, PBT, Fastway
ABOUT US
•
Last mile is more expensive to deliver to – which results in lower margins
•
B2C growth is challenging courier businesses globally
OPPORTUNITY
•
Requires a different pricing proposition
•
Requires better visibility for receivers
•
Pricing for effort / aided by technology to identify residential addresses
•
Notifications to receivers to reduce re-work
•
Improve productivity by merging multi brand runs
•
Multi year programme to improve margin and productivity
•
Bring the market with us
STRATEGY
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
EXPRESS
PACKAGE

•
Only operator competing with NZ Post after the market was deregulated in 1996
•
10% market share
•
Overnight delivery
•
Strong regional offer
•
Leading mailhouse providing digital and physical mail services
ABOUT US
•
Continue to target customers who require superior service and a combination of digital and physical mail delivery services
OPPORTUNITY
•
Build out the network to meet demand – remain nimble and influenced by customer demand
•
Promote our digital mailhouse services to new customers
STRATEGY
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
BUSINESS
MAIL

ABOUT US
•
Improve margins in AU through improved facility utilisation
•
Sell new services to the same customers
OPPORTUNITY
•
Expand utilisation of our facilities to 90% over 3 years
•
Help customers transition from paper to digital technology
•
Start with paper heavy businesses, govt departments, hospitals, large corporates
STRATEGY
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
INFORMATION
MANAGEMENT
•
NZ is a high margin business, 82% utilisation
•
AU is growing well in document storage. Earns lower margins due to lower utilisation of facilities ~ 65%
•
Customers can be hard to transition but are sticky and provide annuity revenue streams
•
Consolidated market now in AU and NZ

SECURE
DESTRUCTION
ABOUT US
•
Move into adjacent markets which require efficient:

pick up,

processing (separation, shredding, baling) and

delivery (selling into commodity markets)
OPPORTUNITY
•
Target business customers

electronic waste

medical waste

coffee cups

plastic and paper

textiles
•
Use a combination of acquisition and start-ups
•
NZ and AU
STRATEGY
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
•
Came from nowhere to become #1 in AU (and longstanding #1 in NZ)
•
Built a business which recycles and securely destroys 47,000T of paper per annum
•
Business has a long tail – given the number of archives in storage
•
Core capabilities: efficient pick-up, processing and delivery

INVESTOR DAY
PRESENTATION ·
23 MAY 2019
PERFORMANCE
OUTLOOK

FY19•
Slowing same-customer growth for Express Pa
ckage in the second half of FY19, particularly
in March and April
•
We have re-secured the Group’s largest customer
for another 3-year term, but at discounted
rates which will flow through FY20
•
Increased investment in growing the Shred-X collection and processing network to take
advantage of new business growth opportunities
PERFORMANCE
OUTLOOK
INVESTOR DAY
PRESENTATION ·
23 MAY 2019

PERFORMANCE
OUTLOOK
FY20Risks•
NZ Post has established a new pricing regime for
bulk mail that directly targets the areas that
DX delivers to and which will require DX to
offer lower prices to retain this work
•
We expect softer organic Express Package B2B
growth based on trading in the 2nd half of
FY19
•
Paper pricing for non-contracted paper in
FY20 is expected to fall by around 15%
Opportunities•
Pricing For Effort has been communicated to cu
stomers over the past month with good levels
of understanding and acceptance
•
Express Package Competitor price rises l
ook to be higher than in previous years
•
The pipeline for both new customers
and acquisition opportunities is healthy
INVESTOR DAY
PRESENTATION ·
23 MAY 2019

INVESTOR DAY
PRESENTATION ·
23 MAY 2019
THE
FUTURE
AT FREIGHTWAYS
INFORMATION
MANAGEMENT
Business Mail is heavily
digital and
complemented by high
priced / high value
physical mail services
A secure destruction and
recycling business driven
by customer’s desires to
collect, process and
re-use valuable
commodities
BUSINESS MAIL
Information Management
business generating
strong cash flows from
physical services,
augmented by faster
growing digital services
Express Package
business is fuelled by
profitable B2C services
and B2B growth (organic,
market share, niche
exploitation)
EXPRESS PACKAGE
SECURE
DESTRUCTION

DISCLAIMER
INVESTOR DAY
PRESENTATION ·
23 MAY 2019
This
 
presentation
 
has
 
been
 
prepared
 
by
 
Freightways
 
Limited
 
("
Freightways
")
 
for
 
information
 
purposes
 
only.
 
This
 
presentation
 
is
 
not
 
a
 
product
 
disclosure
 
statement,
 
prospectus
 
or
 
investment
 
statement.
 
Nothing
 
in
 
this
 
presentation
 
constitutes
 
an
 
invitation
 
to
 
subscribe
 
for
 
shares,
 
securities
 
or
 
financial
 
products
 
in
 
Freightways.
Nothing
 
in
 
this
 
presentation
 
constitutes
 
legal,
 
accounting,
 
financial
 
or
 
taxation
 
advice
 
or
 
any
 
other
 
advice
 
of
 
any
 
kind.
 
Any investor
 
should
 
consult
 
their
 
own
 
professional
 
advisors
 
and
 
conduct
 
their
 
own
 
independent
 
investigation
 
of
 
Freightways
 
and
 
the
 
information
 
contained
 
in
 
this
 
presentation,
 
including
 
any
 
statements
 
relating
 
to
 
the
 
future
 
performance
 
of
 
Freightways.
The
 
information
 
in
 
this
 
presentation
 
is
 
given
 
in
 
good
 
faith
 
and
 
has
 
been
 
obtained
 
from
 
sources
 
believed
 
to
 
be
 
reliable
 
and
 
accurate
 
at
 
the
 
date
 
of
 
this
 
presentation.
 
This
 
presentation
 
may
 
include
 
forward
‐
looking
 
statements
 
regarding
 
future
 
events
 
and
 
the
 
future
 
financial
 
performance
 
of
 
Freightways.
 
Such
 
forward
‐
looking
 
statements
 
are
 
based
 
on
 
current
 
expectations
 
and
 
involve
 
risks
 
and
 
uncertainties.
 
Actual
 
results
 
may
 
be
 
materially
 
different
 
from
 
those
 
stated
 
in
 
any
 
forward
‐
looking
 
statements.
 
Nothing
 
contained in
 
this
 
document
 
is
 
or
 
should
 
be
 
relied
 
on
 
as
 
a
 
promise
 
as
 
to
 
the
 
future
 
performance
 
or
 
condition
 
of
 
Freightways
 
or
 
as
 
to
 
any
 
other
 
future
 
eventsExcept
 
as
 
required
 
by
 
law
 
or
 
the
 
NZX
 
Listing
 
Rules,
 
Freightways
 
undertakes
 
no
 
obligation
 
to
 
update
 
any
 
forward
‐
looking
 
statements,
 
whether
 
as
 
a
 
result
 
of
 
new
 
information,
 
future
 
events
 
or
 
otherwise
 
or
 
to
 
report
 
against
 
any
 
forward
‐
looking
 
statements.
None
 
of
 
Freightways
 
or
 
Craigs Investment
 
Partners,
 
their
 
affiliates,
 
or
 
their
 
respective
 
advisers
 
or
 
representatives,
 
give
 
any
 
warranty
 
or
 
representation
 
as
 
to
 
the
 
accuracy
 
or
 
completeness
 
of
 
the
 
information
 
contained
 
in
 
this
 
presentation,
 
and
 
exclude
 
their
 
liability to
 
the
 
maximum
 
extent
 
permitted
 
by
 
law.

THANK YOU