Mainfreight – Full Year 2019 Presentation

MAINFREIGHT LIMITED
FULL YEAR R ES U LT
TO 31 MARCH 2019

Page 2
Result Summary
Revenue up 12.9% to $2.95 billion (excluding FX up 10.8%)
An increase of $337.39 million
Offshore revenues now exceed $2.24 billion
EBITDA at $257.05 million, up 19.5% or $41.94 million
Excluding FX up 18.0%
Net surplus after tax before abnormal items up 26.0%
to $141.08 million
REVENUE
EBITDA
NET SURPLUS

Page 3
Dividend / Net Debt / Discretionary Bonus
Final dividend of 34.0 cents per share
Books close 12 July 2019; payment on 19 July 2019
Total dividend for year 56.0 cents per share, increase of 11.0 cents
or 24.4% over the previous year
Gearing ratio improved from 21.7% to 13.5%
Net debt reduction of $66.37 million to $130.48 million
Payable at Board’s discretion to qualifying team members
Up 31.6% to $27.2 million
DIVIDEND
NETDEBT
BONUS

Page 4
Capital Management
NZ$ MILLIONTHIS YEARLAST YEAR
Operating cash flow197.4140.2
Capital expenditure totalled $89.2 million, with Land & Buildings $30.8 million,
Plant & Equipment $42.8 million, and Information Technology $15.6 million
Estimated F20 depreciation: $54.0million
Major items of Land & Buildings include:
West Auckland, NZ –land$17.6 million
Sundry New Zealand property$8.4 million
Sundry other property$ 4.8 million

Page 5
Capital Management ...
Capital Expenditure Expectations FY20NZ$ million
Property
New Zealand
54
Australia108
Europe3
Total Property165
Other48
Total Capital213

Page 6
Full Year Analysis: Revenue
$000THIS YEARLAST YEARVARIANCE
NewZealand: NZ$
718,791666,0397.9%

Australia: AU$
710,172623,26813.9%

USA: US$
493,861435,26413.5%

Asia*: US$
74,44883,863(11.2)%

Europe: EU€
376,279336,11012.0%

Total Group: NZ$2,954,0872,616,700
12.9%

(exclFX) 10.8%

* Inter-company totalled US$52.72 million for Asia, up from US$45.81 million
Revenue including inter-company for Asia is down 1.9%

Page 7
Full Year Analysis: EBITDA
$000THIS YEARLAST YEARVARIANCE
NewZealand: NZ$
110,55698,53112.2%

Australia: AU$
55,37249,88711.0%

USA: US$
26,11119,03137.2%

Asia: US$
6,3084,92128.2%

Europe: EU€
23,26417,77530.9%

Total Group: NZ$*
257,049215,11419.5%

(exclFX) 18.0%

* Of the NZ$42 million increase in EBITDA, NZ$30 million is generated “offshore”

Page 8
Second Half Comparison: Revenue
$000
2
nd
HALF
THIS YEAR
2
nd
HALF
LAST YEARVARIANCE
NewZealand: NZ$
375,671349,172
7.6%

Australia: AU$
368,469330,355
11.5%

USA: US$
256,707232,206
10.6%

Asia: US$
34,11546,252
(26.2)%

Europe: EU€
193,951173,599
11.7%

Total Group: NZ$1,523,0931,391,117
9.5%

(exclFX) 8.6%


Page 9
Second Half Comparison: EBITDA
$000
2
nd
HALF
THIS YEAR
2
nd
HALF
LAST YEARVARIANCE
NewZealand: NZ$65,130
60,085
8.4%

Australia: AU$32,854
29,058
13.1%

USA: US$15,121
10,589
42.8%

Asia: US$3,136
2,895
8.3%

Europe: EU€12,859
9,372
37.2%

Total Group: NZ$148,707126,348
17.7%

(exclFX) 17.1%


Page 10
Product Performance
NZ$000THIS YEARLAST YEARVARIANCEVAR ex FX
GroupRevenue2,954,0872,616,700
12.9%

10.8%

EBITDA
257,049215,114
19.5%

18.0%

TransportRevenue1,450,9421,297,013
11.9%

10.2%

EBITDA
156,681128,382
22.0%

21.2%

WarehousingRevenue346,567289,080
19.9%

17.5%

EBITDA
37,28233,142
12.5%

10.9%

Air & OceanRevenue1,156,5781,030,607
12.2%

9.6%

EBITDA63,08653,590
17.7%

14.9%


Page 11
New Zealand
Network contribution
Transport
Network intensification continues; reaching smaller regional
areas
Mt Maunganui, South and West Auckland projects underway
Continuing to take market share
Logistics
Opened in Cromwell
Construction underway for leased Hamilton site
Planning for Mt Maunganui
Ninth warehouse for Auckland opened –post-result
Large solar installation to assist chilled warehouse in Auckland
Revenue: $719m 7.9%
EBITDA: $111m 12.2%

Page 12
New Zealand
Air & Ocean
Continuing to take inbound market share
Perishables capability improved with investment in
Auckland
Regional branches contributing
New Zealand Outlook
Sales pipeline reasonably full
Increased overheads likely a drag in first half
Increased salaries again at lower end of pay scale
Ongoing capital investment
Expect improved results year on year

Page 13
Australia
Slower start; improved finish
Transport
Implementation of Mainstreet (software platform) – without
issue, slower start
Network growth, remains a priority
Sydney’s second cross-dock advancing; rail capable
Logistics
New business opportunities necessitating more warehouses
Consolidation of 3 temporary sites into 1; 26,000 m2 Sydney
Beverage sector exposure increasing
Dangerous goods; retail sector opportunities to complement
Chemcouriers’ competency
Revenue: AU$710m 13.9%
EBITDA: AU$55m 11.0%

Page 14
Australia
Air & Ocean
Stronger push for more export growth vs import
LCL focus/capability required to grow this sector
Perishable market capability to feature medium-term
Australia Outlook
Transport network to continue its expansion
Sales pipeline requires more effort / supply chain initiatives
Increased salaries again at lower end of pay scale
Conscious of a slowing economy; slower revenue growth last
quarter

Page 15
The Americas
Improvement across all three Mainfreight divisions
Transport
Improving sales (particularly in first half) and more direct
line-haul assisting profit
Still a large volume of freight with third parties – requires
change
More direct line-haul committed between our major hubs
Revenue:US$494m13.5%
EBITDA: US$26m 37.2%

Page 16
The Americas
Logistics/Warehousing
Improving performance and utilisation from Los Angeles and
Newark warehouses assisting profitability
Sales pipeline relatively strong for Dallas and Los Angeles
New warehouse for Atlanta and expansion to Seattle
Air & Ocean
Opened in Salt Lake City and Santiago (Chile) –total branches
now number 16
Establishing sales desks in other Transport locations
Strong emphasis on LCL consolidation for global network

Page 17
The Americas
CaroTrans
Improved processes and freight utilisation – further
improvement needed
Better alignment of overseas agencies
Stronger sales focus/management appointments
Margin improvement – more expected
Americas Outlook
Sales / Sales / Sales –still a weakness
Conscious of China/USA trade lane volatility

Page 18
Europe
Transport performance key to overall improvement
Transport
Improving line-haul utilisation, cross-dock management and
deliveries in Netherlands provided much-improved results
Partnership relationships for “other” European country
deliveries enhanced
Belgium and France improving –Romania developing
Logistics
2 new warehouses commissioned; utilisationand profitability
improving
Increasing supply chain opportunities with warehouse customers
Profit per m
2
requires improvement
Revenue: €376m12.0%
EBITDA: €23m30.9%

Page 19
Europe
Air & Ocean
Opened in Hamburg, Germany – sea freight focus (air freight
for Frankfurt)
Pleasing progress in the UK and Italy
Air & Ocean network within Europe now 12 branches
Work to do in Belgium and France
Europe Outlook
More sales effectiveness needed
Increasing sales personnel numbers
Defer warehousing development until full utilization and
margins achieved
Brand awareness improving /assisting
More supply chain initiatives with customers required

Page 20
Asia
Exited poor performing air freight revenue
Air & Ocean
Focus on improving margins –exiting of wholesale air freight
Sales desks to assist in-country growth – 2
nd
tier cities
Expect USA/China trade-lane issues to impact trade volumes
– unpredictable
Intra-Asia trade volumes increasing
Asia Outlook
Diversification of network into ASEAN region will assist to
offset USA trade-lane issues and provide more regional
growth to Mainfreight network globally
Airlines/shipping lines withdrawing capacity on trans-Pacific
Revenue: US$74m(11.2)%
EBITDA: US$6m 28.2%

Page 21
Strategic Initiatives
Network intensity -ongoing
Within cities
Within countries
Globally

Page 22
Strategic Initiatives -continued
Top 500 Customers = 56% of total revenue
Top 500 Customers: Use of Mainfreight Divisions (Transport/Warehousing/Air & Ocean)
Increasing regional trading opportunities across country locations where possible
27%
42%
31%
1 Division2 Divisions3 Divisions
32%
40%
28%
1 Division2 Divisions3 Divisions
20192018

Page 23
Group Outlook
Expect ongoing improvement, although reduced trading days in
April has had an impact
IFRS 16 Lease Capitalisation – estimated impact for 2020 Year
Increased Assets and Liabilities $579 million
Increased EBITDA $105 million
Reduced PBT $8 million
Supply chain sales initiatives across total network, delivering
better than average growth
Network to develop further
Investment in property requires ~$350 million in F20 and F21
Therefore estimated net debt F20 of $200 million; F21 $264 million
SHORT-TERM
MEDIUM TO
LONG-TERM
CAPITAL

Page 24
Financial Calendar F20
DAT E
Annual Meeting of Shareholders30 July 2019
F20 – 6 months ended 30 September 201913 November 2019
F20– 12 months ended 31 March 202027 May 2020