Mainfreight Trading Update 8 April 2020

Mainfreight Lane | off Saleyards Road | Otahuhu 1062 | New Zealand
Tel +64 9 259 5500 | Fax +64 9 270 7400
PO Box 14-038 | Panmure | Auckland 1741 | New Zealand
Supporters of
NZX MARK
ET RELEASE
8 Apri
l 2020
MAINFR
EIGHT LIMITED – TRADING UPDATE
Mainfreight Limited (NZX: MFT) provides this trading update as the effects of
COVID-19 lockdowns, across the five regions of the world where Mainfreight is
located, begin to impact current trading patterns.
Mainfreight is deemed an essential service provider across all our global operations,
however differences in COVID-19 response levels, and in customer profiles, are
providing varying financial results by region.
Financial Year Ended 31 March 2020
As noted in our last release dated 17 March 2020, we expect to complete the full
financial year to 31 March 2020 ahead of the prior year at revenue and profit levels.
Trading from our regions remained consistent into the year end, with just
New Zealand experiencing a downturn in the last week due to the full lockdown
implemented from 25
th
March 2020.
April 2020 Trading
Having just completed our first full week of trading for April, we have experienced a
mix of trading results across our five regions.
Total sales revenues for the week declined globally by 7% year on year (12%
excluding foreign exchange), with New Zealand substantially impacted by a 40%
reduction. This provided a positive global PBT (profit before tax) figure for the week.
However, short trading weeks due to the Easter and ANZAC holidays, together with
deteriorating trading conditions expected in all regions, will likely see the April month
results significantly impacted.
MAINFREIGHT LIMITED
MAINFREIGHT – GLOBAL LOGISTICS

Mainfreight Limited – Trading Update
8 April 2020 
‐ 2 ‐ 
Regional Overview
N
ew Zealand
Lockdown 25
th
March 2020 | Essential product delivery only
While freight volumes and trading were strong ahead of the lockdown restrictions, the
limitations in place for the movement of essential goods only, has impacted
New Zealand trading substantially during the first week of April.
Transport sales revenues declined significantly as non-essential freight was no
longer available for distribution. As the definition of “essential products” broadens,
we expect to see volumes improve.
Warehouse storage revenue continues, however pick activity has decreased to
essential products only. Food and food-related product activity remains consistent
with prior weeks.
In our Air & Ocean operations, normal air freight volume has been replaced with air
charter opportunities. The majority of these are committed, with important export
volume into China, and with returns of PPE supplies. Australian air charters are
currently under negotiation. Sea freight imports are variable in volume, with only
essential supplies able to be delivered. This may pose medium-term equipment
supply issues for the shipping industry for important exports.
Our New Zealand operations expect a difficult month of trading through April,
however are well positioned for post-lockdown developments.
Australia
Partial lockdown: developing | Essential and non-essential supplies moving
Freight volumes remain reasonable across all of our divisions within Australia, with a
number of new customer gains assisting.
Inter-State distribution continues for our Transport operations, and with a high level
of exposure to supermarket and hardware retail sectors, volumes are ahead of the
year prior.
In our Warehousing operations, products related to the retail and restaurant sectors
are slowing, however food and food-related products continue to trade at regular
levels of activity.

Mainfreight Limited – Trading Update  
8 April 2020 
 
 
 
‐ 3 ‐ 

For Air & Ocean, our import sea freight volumes have risen as Chinese exports
commence again. How long this demand will continue is uncertain. Air freight volume
is consistent, however charter activity disappoints.

Performance from Australia through late March and into April has surprised, and
while Easter trading may see a decline, if Australia’s state of partial lockdown remains
in place, we expect similar trading levels to continue after Easter. The first week of
April trading saw sales revenues up 9%.

Asia
China lockdown easing / Southeast Asia lockdowns more substantial with tight
border restrictions
Our China air freight volumes are improving as demand for air charters increases,
particularly to USA and Europe for PPE supplies. Air freight pricing is increasing ex
China, but normalising ex Hong Kong.

Sea freight volumes ex China have increased, although forward orders now appear
to be cancelling due to delivery difficulties in the country of destination.

Southeast Asian operations vary from country to country, dependent on the severity
of lockdown restrictions in place.

While the April outlook for Asia is reasonably positive, with blank sailings rising and
shipping orders declining for May shipments, we expect an impact in our May
financials. Asian revenues were in line this week with the prior year.

Europe
Lockdowns differ by country: some partial, some full (eg Italy, Spain, UK)
Borders remain open for freight
Financial performance has remained relatively consistent through March and now
into April. However declining freight tonnage for Italy, Spain and now the UK is having
some impact.

Our Transport volumes have continued strongly through the Netherlands and
Germany, with just high-end retail product declining. Various industries remain open
and able to export and receive imported supplies.

Mainfreight Limited – Trading Update  
8 April 2020 
 
 
 
‐ 4 ‐ 

Our Warehousing operations have seen a similar decline in “High Street” retail
volume, but continue to receive storage revenue. Pick activity remains consistent for
supermarket-supplied product.

In Air & Ocean, sea freight volumes have been impacted by the earlier Asian
shutdown, but are slowly re-emerging. Air freight enquiry levels are improving with
charter activity from Asia underway.

Our outlook for Europe remains positive, with some manufacturers expecting to
increase production through April. The first week of April saw revenues decline just
7.8%.

Americas
Lockdown restrictions differ by State: moving to full “stay at home” status
Freight volumes were strongly consistent through March, only slowing as State
lockdowns have come into effect in the last two weeks.

Transport volumes have declined about 20%, with health care and home use
products still relatively strong.

In our Warehousing division, new customer implementation has continued, and
activity levels are reasonably consistent.

In the Air & Ocean sector, sea freight import volume has improved, however it is
expected to decline through April and May as the impact of lockdowns increases. Air
freight charters are underway, dominated by PPE supplies from Asia.

In our CaroTrans sea freight business, demand for LCL capacity has increased.

Revenue has held stronger than expected, and our outlook for April and May for the
Americas is not as bad as expected. The first week of April saw revenues decline
8%.

Mainfreight Limited – Trading Update  
8 April 2020 
 
 
 
‐ 5 ‐ 

Operating Expenditure
A number of initiatives have been put in place to reduce and/or eliminate unnecessary
operating expenditure:
 Our usual annual wage and salary review has been deferred, and a hiring freeze
is in place. Elimination of the use of casual labour has also been implemented
globally.
 Holiday leave is being utilised where appropriate, and in discussion with team
members.
 Managing Director’s salary and other Directors’ fees reduction of 50% in effect for
the foreseeable future.
 Government employment subsidies are under review with likely application in
New Zealand and some European countries.
 All unnecessary discretionary expense reductions have also been actioned.
 Assistance to owner operators with both financial lease and government wage
relief negotiations has been ongoing.

Our People
 The safety of our people while operating as an essential business is our highest
priority.
 New Zealand Government COVID-19 health measures have been implemented
and used as a blue-print for our operations in other regions.
 Also a priority is the retention of employment for our people, as we implement
team rotation, combined with working at home where possible.

Debt / Capital Expenditure
Debt facilities are satisfactory and well supported by our six banking partners.
Current debt facilities total $500 million, of which $230 million remained undrawn at
31 March 2020. An amount of $415 million matures in April 2024, the balance of $85
million in April 2022. Net debt at 31 March 2020 is approximately $160 million.

Capital expenditure of $120 million has been deferred. Committed capital
expenditure amounts to $78 million for current construction projects in the 2021
financial year.

Mainfreight Limited – Trading Update  
8 April 2020 
 
 
 
‐ 6 ‐ 

Outlook
Trading through April is expected to be significantly reduced from the prior year, albeit
shielded somewhat as our global locations provide a measure of sanctuary from a
single country exposure.

Additional financial leverage remains available to us if needed. Our balance sheet
and debt facilities provide sufficiently strong coverage at this time. We remain well
positioned for economic recovery.

Further updates will be provided when appropriate.





Ends


Don Braid
Group Managing Director


Mainfreight Limited
2 Railway Lane, Otahuhu, Auckland 1062
PO Box 14038, Panmure, Auckland 1741
Email: don@mainfreight.com