Mainfreight – Half Year 2020 Presentation

MAINFREIGHT
 
LIMITED
HALF
 
YEAR
 
RESULT
TO
 
30
 
SEPTEMBER
 
2019
MAINFREIGHT
 
LIMITED
HALF
 
YEAR
 
RESULT
TO
 
30
 
SEPTEMBER
 
2019

Page
 
2
Result
 
Summary
Without IFRS
 
16:
 
“apples
 
with
 
apples”
Revenue
$1.500
 
billion up
 
4.9% (up
 
4.4%
 
with
 
FX)
EBITDA*
$119.11
 
million up
 
9.9% (up
 
9.7%
 
with
 
FX)
Net
 
profit
$62.21 million up
 
11.7% (up
 
11.2%
 
with
 
FX)
Under
 
IFRS
 
16:
 
“apples
 
with
 
oranges”
Revenue
$1.500
 
billion up
 
4.9%
EBITDA
$176.46
 
million up
 
62.9%
Net
 
profit
$59.13 million up
 
6.2%
Under
 
IFRS
 
16,
 
total
 
assets
 
increase
 
by
 
$587.59
 
million
 
to
 
$2.203
 
billion
* EBITDA: Earnings before net interest expense, tax, depreciati
on, amortisation, abnormal items, royalties, share based payment
expense,
minority interest and associates

Page
 
3
First
 
Half
 
2020
 
Review

Satisfactory
 
result
 
reflecting
 
improvements
 
in
 
Europe
 
and
 
Americas

New
 
Zealand
 
and
 
Australia
 
contending
 
with
 
slowing
 
economies
 
and
 
higher
 
overhead
 
costs

Asia
 
result
 
disappoints,
 
impacted
 
by
 
USA
 
trade
 
tariffs,
 
Hong
 
Kong
 
disruptions
 
and
 
network
 
expansion
 
costs

Trading
 
into
 
second
 
half
 
remains
 
ahead
 
of
 
prior
 
year

Page
 
4
Dividend
 
/
 
Net
 
Debt
Interim
 
dividend
 
of
 
25.0
 
cents
 
per
 
share
Books
 
close
 
6
 
December
 
2019;
 
payment
 
on
 
13
 
December
 
2019
Increase
 
of
 
3.0
 
cents
 
or
 
13.6%
 
over
 
last
 
year’s
 
interim
 
dividend
Net
 
debt
 
increase
 
of
 
$57.25
 
million
 
(since
 
31/3/19)
 
to
 
$187.73
 
million
Gearing
 
ratio
 
at
 
17.5%,
 
previously
 
13.5%
 
(at
 
31/3/19)
DIVIDENDDIVIDEND
NET DEBTNET DEBT

Page
 
5
Capital
 
Management
NZ$
 
MILLION
THIS
 
YEAR
LAST
 
YEAR
Operating
 
cash
 
flow
73.96
71.00

Capital
 
expenditure
 
totalled
 
$90.53
 
million
 
for
 
the
 
period,
 
including

Estimated
 
F20
 
full
 
year
 
capital
 
expenditure
$170
 
million

Estimated
 
F21
 
full
 
year
 
capital
 
expenditure
$190
 
million

Land
 
&
 
Buildings
$72.44
 
million

Plant
 
&
 
Equipment
$10.98
 
million

Information
 
Technology
$
 
7.11
 
million

Page
 
6
Half
 
Year
 
Analysis:
 
Revenue
 
$000
THIS
 
YEAR
LAST
 
YEAR
VARIANCE
New Zealand:
 
NZ$
362,571
343,120
5.7%

Australia:
 
AU$
360,423
341,703
5.5%

USA:
 
US$
244,039
237,154
2.9%

Asia:
 
US$
35,991
40,333
(10.8)%

Europe:
 
EU€
193,766
182,329
6.3%

Total
 
Group:
 
NZ$
1,500,466
1,430,994
4.9%

(excl
 
FX)
 
4.4%


Page
 
7
Half
 
Year
 
Analysis:
 
EBITDA
$000
UNDER IFRS16
THIS
 
YEAR
PRE IFRS16
THIS YEAR
PRE
 
IFRS16
LAST YEAR
PRE
 
IFRS16
VARIANCE
New Zealand:
 
NZ$
58,747
46,778
45,426
3.0%

Australia:
 
AU$
40,940
22,624
22,518
0.5%

USA:
 
US$
18,803
13,439
10,990
22.3%

Asia:
 
US$
3,543
2,794
3,172
(11.9%)

Europe:
 
EU€
23,702
13,898
10,405
33.6%

Total
 
Group:
 
NZ$*
176,457
119,113
108,342
9.9%

(excl FX)
 
9.7%

*
  
Of
 
the
 
NZ$10.77
 
million
 
increase
 
in
 
EBITDA,
 
NZ$9.42
 
million
 
was
 
generated
 
“offshore”

Page
 
8
Product
 
Performance
 
NZ$000
THIS
 
YEAR
LAST
 
YEAR VARIANCE VAR
 
ex
 
FX
Group
Revenue
1,500,466
1,430,994
4.9%

4.4%

EBITDA
#
119,113
108,342
9.9%

9.7%

Transport
Revenue
759,107
720,252
5.4%

5.5%

EBITDA
#
70,859
67,733
4.6%

4.8%

Warehousing Revenue
179,591
162,062
10.8%

11.4%

EBITDA
#
19,831
15,261
29.9%

30.8%

Air
 
&
 
Ocean
Revenue
561,768
548,680
2.4%

1.0%

EBITDA
#
28,423
25,348
12.1%

10.0%

# EBITDA pre-IFRS 16

Page
 
9
New
 
Zealand

Slowing
 
economic
 
conditions

Growth
 
across
 
all
 
3
 
divisions;
 
better
 
EBITDA
 
improvement
 
from
 
Warehousing
 
and
 
Air
 
&
 
Ocean

Transport

Established
 
customer
 
volumes
 
lower
 
than
 
the
 
year
 
prior

Chemcourier inter
‐
Island
 
volumes
 
down;
 
more
 
product
 
warehoused
 
in
 
Christchurch

Continue
 
to
 
take
 
market
 
share

Rate
 
review
 
1
 
August
Revenue:
 
$363m
     
5.7%
EBITDA:
 
$47m
  
3.0%

Page
 
10
New
 
Zealand

Air
 
&
 
Ocean

Revenue
 
growth
 
improvement:
 
export/import,
 
sea/air

Perishable
 
market
 
share
 
gains

Warehousing

Improving
 
utilization
 
across
 
new
 
sites
 
assisting
 
revenue
 
and
 
profitability

Now
 
in
 
16
 
sites,
 
up
 
3
 
–with
 
additional
 
sites
 
planned

Page
 
11
Australia

Revenue
 
growth
 
in
 
all
 
3
 
divisions;
 
poorest
 
in
 
Transport

EBITDA
 
improvement
 
in
 
Air
 
&
 
Ocean
 
and
 
Warehousing;
 
Transport
 
contribution
 
down

Celebrating
 
30
 
years
 
in
 
Australia
 
in
 
2019

Transport

Increased
 
labour costs:
 
team
 
numbers
 
and
 
salary
 
increases
 
(Melbourne
 
branches
 
worst
 
affected)

Gross
 
margins
 
improving
 
–rate
 
review
 
Sep
‐
19
 
assisting

Market
 
share
 
gains
 
not
 
enough
 
to
 
offset
 
down
‐
trading
 
of
 
current
 
customer
 
base

South
 
Dandenong
 
(Melbourne)
 
development
 
in
 
planning
 
phase
Revenue:
 
AU$360m 5.5%
EBITDA:
 
AU$23m
 
0.5%

Page
 
12
Australia

Air
 
&
 
Ocean

Improved
 
performance
 
in
 
Perishable
 
sector
 
assisting

Revenue
 
growth
 
in
 
export
 
sector

Import
 
sea
 
freight
 
volumes
 
less
 
than
 
same
 
period
 
last
 
year

Gross
 
margins
 
improving

Warehousing

Revenue
 
and
 
EBITDA
 
improvement

Utilisation levels
 
up
 
in
 
most
 
sites

New
 
Sydney
 
site
 
(Kookaburra)
 
now
 
at
 
capacity

Construction
 
underway
 
for
 
second
 
site
 
at
 
Epping
 
(Melbourne)

Page
 
13
The
 
Americas

Improvement
 
in
 
revenue
 
across
 
all
 
3
 
Mainfreight
 
divisions;
 
CaroTrans’
 
revenue
 
declined

EBITDA
 
improvement
 
in
 
all

Transport

Improving
 
margins
 
with
 
better
 
fixed
 
line
‐
haul
 
utilization

Continuing
 
focus
 
on
 
LCL
 
domestic
 
freight
 
growth
 
–
particularly
 
“every
 
day”
 
freight

Stronger
 
sales
 
focus
 
on
 
FMCG
 
freight
 
verticals;
 
exiting
 
transactional/project
 
business
Revenue: US$244m 2.9%EBITDA:
  
US$13m
  
22.3%

Page
 
14
The
 
Americas

Air
 
&
 
Ocean

Revenue
 
growth
 
subdued
 
as
 
air
 
freight
 
declines;
 
prior
 
year
 
included
 
pre
‐
tariff
 
volumes

Tariffs
 
on
 
China
 
trade
 
having
 
an
 
effect

Air
 
freight
 
initiatives
 
to
 
boost
 
growth

Warehousing

Utilisation improved
 
with
 
new
 
customer
 
gains

LA,
 
Newark
 
and
 
Dallas
 
at
 
capacity

New
 
sites
 
opened:
 
Seattle
 
Jul
‐
19;
 
Californian
 
Inland
 
Empire
Oct
‐
19
 

Demand
 
increasing
 
for
 
our
 
improved
 
sites
 
and
 
services

Page
 
15
The
 
Americas

CaroTrans

EBITDA
 
contribution
 
much
 
improved

Gross
 
margin
 
improvements

Container
 
utilization

Repositioning
 
cost
 
management

Disappointing
 
revenue
 
levels

2
 
lost
 
customers
 
(FCL
 
and
 
LCL)

Page
 
16
Asia

USA
 
import
 
tariffs
 
–volume
 
moved
 
has
 
reduced
 
by
 
30%

Prior
 
year
 
included
 
large
 
pre
‐
tariff
 
airfreight
 
shipments,
 
not
 
available
 
this
 
year

Overhead
 
costs
 
up
 
with
 
new
 
branches
 
in
 
Japan
 
&
 
Malaysia

Increased
 
sales
 
team
 
numbers

Hong
 
Kong
 
riots
 
disrupting
 
outbound
 
air
 
freight
 

Strong
 
emphasis
 
on
 
Europe
 
trade
 
lane
 
growth

South
 
Korea
 
opportunity
 
early
 
2020

Development
 
of
 
Southeast
 
Asia
 
capability
 
to
 
meet
 
shifting
 
supply
 
chain
 
demand
 
from
 
China
Revenue:
 
US$36m (10.8)%
EBITDA:
 
US$3m (11.9)%

Page
 
17
Europe

Strong
 
revenue
 
and
 
EBITDA
 
contribution
 
from
 
Transport
 
and
 
Warehousing
 
divisions

Transport

Improving
 
gross
 
margins
 
from

Cross
‐
dock
 
efficiencies

Improved
 
PUD
 
and
 
line
‐
haul
 
truck
 
utilization

Improving
 
quality
 
and
 
transit
 
schedules

Second
 
NL
 
cross
‐
dock
 
opened
 
in
 
Tilburg,
 
Sep
‐
19

Some
 
downtrading by
 
established
 
customers
 
offset
 
by
 
new
 
customer
 
gains
Revenue:
 
€194m 6.3%
EBITDA:
 
€14m 33.6%

Page
 
18
Europe

Warehousing

Customer
 
implementations
 
completed
 
in
 
new
 
warehouses
 
of
 
Born
 
and
 
Zaltbommel
 
(NL)

Margin
 
improvements
 
through
 
utilisation
 
and
 
labour
 
efficiencies
 
across
 
network

Casual
 
labour replaced
 
with
 
full
 
time
 
team
 
members
 
for
 
quality
 
and
 
efficiency
 
gains

Air
 
&
 
Ocean

Decrease
 
in
 
air
 
freight
 
volume
 
/
 
revenue

Sea
 
imports
 
are
 
increasing

Gross
 
margin
 
improvements
 
assisting

Expect
 
to
 
open
 
Barcelona
 
(Spain)
 
Jan
‐
20

Page
 
19
Land
 
&
 
Building
 
Development
 
Update
NZ$
 
MILLION
Half
 
Year
Est.
 
Full
 
Year
Total
 
Land
 
&
 
Buildings
 
expenditure
72.44
122.00
Of
 
note
:

Australia

South
 
Dandenong
 
(land
 
purchase)
$33.7
 
million

Adelaide
 
(land
 
purchase)
$8.1
 
million

Epping
 
(warehouse)
 
land
 
+
 
construction
$12.6
 
million

New
 
Zealand

Mt
 
Maunganui/Mangatawa
 
(transport
 
facility)
$10.0
 
million

Smaller
 
branch
 
extensions:
 
Whangarei/Levin
$4
 
million

Page
 
20
Group
 
Outlook

Satisfying
 
contributions
 
continuing
 
from
 
Europe
 
and
 
Americas

America’s
 
sales
 
growth
 
must
 
improve

Asia
 
unlikely
 
to
 
beat
 
full
 
prior
 
year
 
result

New
 
Zealand
 
and
 
Australia
 
pre
‐
Christmas
 
volumes
 
on
 
the
 
increase

Network
 
expansion
 
to
 
include
 
South
 
Korea
 
and
 
Spain

Expectation
 
of
 
ongoing
 
improvement
 
through
 
to
 
financial
 
year
 
end

Page
 
21
Financial
 
Calendar
 
F20/21
DATE
F20 – 12
 
months
 
ended
 
31
 
March
 
2020
27
 
May
 
2020
Annual
 
Meeting
 
of
 
Shareholders
30
 
July
 
2020
Planning for
 
Investor Day
 
–Mt
 
Maunganui
14
 
October
 
2020
F21
 
–6
 
months
 
ended
 
30
 
September
 
2020
11 November
 
2020

Page
 
22
“Excellence
 
is
 
the
 
gradual
 
result
of
 
always
 
striving
 
to
 
do
 
better”