Mainfreight – Full Year 2020 Presentation

MAINFREIGHT
 
LIMITED
FULL
 
YEAR
 
RESULT
TO
 
31
 
MARCH
 
2020

Page
 
2
Result
 
Summary
Without IFRS
 
16:
 
“apples
 
with
 
apples”
Variance Variance
 
(excl
 
FX)
Revenue
$3.095
 
billion up
 
4.8%
up
 
3.6%
EBITDA*
$281.01
 
million up
 
9.3%
up
 
8.6%
Net
 
profit
 
before
 
abnormals
$156.10 million up
 
10.6%
up
 
9.9%
Under
 
IFRS
 
16:
 
“apples
 
with
 
oranges”
Variance
Variance
 
(excl
 
FX)
Revenue
$3.095
 
billion up
 
4.8%
up
 
3.6%
EBITDA
$398.67
 
million up
 
55.1%
up
 
54.2%
Net
 
profit
 
before
 
abnormals
$147.98 million up
 
4.9%
up
 
4.3%

Under
 
NZ
 
IFRS
 
16,
 
total
 
assets
 
increase
 
by
 
$618.04
 
million
 
to
 
$2.305
 
billion
* EBITDA (Adjusted): Earnings before net interest expense, tax,
depreciation, amortisation, abnormal items, royalties (segment
only; not Group)

Abnormal
 
items
 
reflect
 
a
 
gain
 
of
 
$11.23
 
million; including
 
a
 
positive
 
tax
 
adjustment
 
of
 
$14.70
 
million,
 
one
‐
off
 
redundancy
 
costs
 
in
 
Europe
 
of
 
$0.51
 
million,
 
and
 
$2.96
 
million
 
for
 
final
 
write
‐
off
 
of
 
the
 
European
 
brand
 
name.

Page
 
3
Full
 
Year
 
2020
 
Review

Satisfactory
 
result,
 
with
 
only
 
Asia
 
behind
 
year
 
prior

China
 
close
‐
down
 
and
 
COVID
‐
19
 
pandemic
 
impact
Jan
 
to
 
Mar
 
2020:
 
$6m
 
on
 
EBITDA,
 
and
 
$22m
 
on
 
Revenue

Strong
 
second
 
half
 
from
 
Australia
 
(has
 
continued
 
into
 
April,
 
May)

Disappointed
 
in
 
sales
 
growth
 
at 4.8%

Page
 
4
COVID
‐
19
 
Effect
 
on
 
Trading:
 
April
 
/
 
May
 
Review
Total
 
Company
 
Weekly
 
Results
*
 
(7
 
weeks:
 
1
st
April
 
–17
th
May)
 

Revenue
up
 
$25.3
 
million
up
 
5.7%
 
(down
 
0.3%
 
excl
 
FX)

Profit
 
before
 
tax
=
 
$9.1
 
million
down
 
$6.5
 
million
*
 
Estimates
 
only,
 
based
 
on
 
branch
 
weekly
 
profit
 
&
 
loss
 
accounts

Australian
 
trading
 
through
 
partial
 
lockdown
 
a
 
highlight
 
–ahead
 
of
 
year
 
prior

Asia
 
improving
 
through
 
April
 
and
 
May

New
 
Zealand
 
trading
 
worst
 
affected;
 
recovery
 
in
 
May

Americas
 
– effects
 
apparent
 
later;
 
likely
 
for
 
longer

Europe
 
–mix
 
of
 
results;
 
short
 
trading
 
weeks
 
in
 
April/May
 
affecting
 
profit
 
before
 
tax

Page
 
5
Dividend
Based
 
on
 
improving
 
trading
 
results
 
late
 
April/May;
 
reduced
 
capital
 
expenditure;
 
cash
 
flow
 
and
 
facility
 
levels,
 
Directors
 
have
 
approved
final
 
dividend
 
of
 
34.0
 
cents
 
per
 
share
 
–in
 
line
 
with
 
the
 
year
 
prior
Record
 
date
 
10
 
July
 
2020;
 
payment
 
on
 
17
 
July
 
2020
Full
 
dividend
 
59.0
 
cents,
 
an
 
increase
 
of
 
3.0
 
cents
 
or
 
5.4%
 
over
 
last
 
year’s
 
full
 
dividend
DIVIDEND

Page
 
6
Capital
 
Management
NZ$
 
MILLION
THIS
 
YEAR
LAST
 
YEAR
Operating
 
cash
 
flow
 
pre
‐
NZ
 
IFRS
 
16
200.16
197.42
Operating
 
cash
 
flow
 
post
‐
NZ
 
IFRS
 
16
300.80

Net
 
capital
 
expenditure
 
totalled
 
$155.03
 
million
 
for
 
the
 
period,
 
including

Estimated
 
F21
 
full
 
year
 
capital
 
expenditure
$80.00
 
million

Land
 
&
 
Buildings
$111.72
 
million

Plant
 
&
 
Equipment
$26.64
 
million

Information
 
Technology
$16.67
 
million

Page
 
7
Capital
 
Management
 
continued
Net
 
debt
 
of
 
$157.38
 
million,
 
up
 
$26.90
 
million
 
from
 
prior
 
year
Gearing
 
ratio
 
at
 
14.0%,
 
previously
 
13.5%
 
at
 
31/3/19
Debt
 
facilities
 
total
 
$499.52
 
million
Undrawn
$234.79
 
million
Banking
 
covenants
 
(still
 
based
 
on
 
pre
‐
IFRS
 
16
 
numbers)

Interest
 
Cover
 
Ratio:
      
EBIT
 
/
 
Net
 
Interest
40.01
 
times
 
vs
 
2.75
 
minimum
 
required

Total
 
Debt
 
Cover
 
Ratio:
Net
 
Debt
 
/
 
EBITDA
0.64
 
times
 
vs
 
3.75
 
maximum
 
allowed
NET DEBT
COVENANTS

Page
 
8
Full
 
Year
 
Analysis:
 
Revenue
 
$000
THIS
 
YEAR
LAST
 
YEAR
VARIANCE
New Zealand:
 
NZ$
752,913
718,791
4.7%

Australia:
 
AU$
756,797
710,172
6.6%

USA:
 
US$
493,286
493,861
(0.1)%

Asia:
 
US$
61,364
74,448
(17.6)%

Europe:
 
EU€
401,390
376,279
6.7%

Total
 
Group:
 
NZ$
3,095,394
2,954,087
4.8%

(excl
 
FX)
 
3.6%


Page
 
9
Full
 
Year
 
Analysis:
 
EBITDA
$000
POST IFRS16
THIS
 
YEAR
PRE IFRS16
THIS YEAR
PRE
 
IFRS16
LAST YEAR
PRE
 
IFRS16
VARIANCE
New Zealand:
 
NZ$
139,767
115,889
110,556
4.8%

Australia:
 
AU$
99,579
61,797
55,372
11.6%

USA:
 
US$
39,107
28,006
26,111
7.3%

Asia:
 
US$
5,395
3,914
6,308
(37.9)%

Europe:
 
EU€
49,710
29,568
23,264
27.1%

Total
 
Group:
 
NZ$*
398,671
281,006
257,049
9.3%

(excl FX)
 
8.6%

*
  
Of
 
the
 
NZ$23.96
 
million
 
increase
 
in
 
EBITDA,
 
NZ$18.62
 
million
 
was
 
generated
 
“offshore”

Page
 
10
Product
 
Performance
 
NZ$000
THIS
 
YEAR LAST
 
YEAR VARIANCE VAR
 
ex
 
FX
Transport
Revenue
1,576,320 1,450,942
8.6%

7.9%

EBITDA
 
pre
‐
IFRS16
171,308
156,681
9.3%

9.1%

EBITDA
 
post
‐
IFRS16
223,534
Warehousing Revenue
383,728
346,567
10.7%

10.1%

EBITDA
 
pre
‐
IFRS16
50,526
37,282
35.5%

35.0%

EBITDA
 
post
‐
IFRS16
101,961
Air
 
&
 
Ocean Revenue
1,135,346 1,156,578
(1.8)%

(3.7)%

EBITDA
 
pre
‐
IFRS16
59,172
63,086
(6.2)%

(8.0)%

EBITDA
 
post
‐
IFRS16
73,176

Page
 
11
Customer
 
Trading

Top
 
500
 
Customers
 
=
 
57%
 
of
 
total
 
revenue
 
(last
 
year
 
56%)

Top
 
500
 
Customers:
 
Use
 
of
 
Mainfreight
 
Divisions
 
(Transport/Warehousing/Air
 
&
 
Ocean)

Increasing
 
regional
 
trading
 
opportunities
 
across
 
country
 
locations
 
where
 
possible
28%
41%
31%
1 Division
2 Divisions
3 Divisions
2020 2019
27%
42%
31%
1 Division
2 Divisions
3 Divisions

Page
 
12
New
 
Zealand

Acceptable
 
result
 
overall,
 
lower
 
growth
 
than
 
expected,
 
higher
 
overhead
 
costs
 
(salary
 
increases)

Construction
 
of
 
new
 
Transport
 
facilities
 
at
 
Mt
 
Maunganui,
 
Levin,
 
Blenheim,
 
Gore
 
and
 
Oamaru

Additional
 
Warehousing
 
sites
 
in
 
Auckland;
 
new
 
contracts
 
confirmed

Air
 
&
 
Ocean
 
continue
 
to
 
take
 
market
 
share
Revenue
$753m
     
4.7%
EBITDA
 
pre
‐
IFRS16
$116m
  
4.8%
EBITDA
 
post
‐
IFRS16
$140m
  

Page
 
13
New
 
Zealand:
 
April/May
 
2020
 
Trading
 
(7
 
weeks)
Revenue
Decline
 
of
 
16%
Profit
 
before
 
Tax Break
‐
even;
 
down
 
$7m

Trading
 
improving
 
into
 
May
 
for
 
Transport
 
and
 
Warehousing;
 
expect
 
this
 
to
 
improve
 
further

Air
 
&
 
Ocean
 
continued
 
to
 
increase
 
revenues
 
during
 
lockdown
 
via
 
air
 
charter
 
services

Page
 
14
Australia

Second
 
half
 
improvements
 
particularly
 
in
 
Warehousing
 
and
 
Transport

Increased
 
warehouse
 
footprint,
 
supported
 
by
 
customer
 
gains

Air
 
&
 
Ocean
 
steady,
 
developing
 
Perishable
 
product
 
slowly
Revenue
AU$757m
     
6.6%
EBITDA
 
pre
‐
IFRS16
AU$62m
  
11.6%
EBITDA
 
post
‐
IFRS16
AU$100m
  

Page
 
15
Australia:
 
April/May
 
2020
 
Trading
 
(7
 
weeks)

Australia’s
 
partial
 
lockdown
 
has
 
provided
 
steady
 
revenue
 
increases/market
 
share
 
gains

Ongoing
 
strong
 
customer
 
enquiry

Expect
 
these
 
trends
 
to
 
continue
Revenue
Increase
 
of
 
13%
Profit
 
before
 
Tax AU$6m,
 
up
 
AU$4m

Page
 
16
The
 
Americas

Improving
 
margins
 
in
 
Transport
 
saw
 
EBITDA
 
increase

However
 
disappointing
 
revenue
 
growth
 
in
 
Transport
 
and
 
Air
 
&
 
Ocean
 
(trans
‐
Pacific
 
ex
 
Asia
 
volume
 
decline)

Warehousing
 
providing
 
good
 
improvement,
 
increasing
 
footprint
 
by
 
44%

CaroTrans
 
steady
 
EBITDA
 
progress

Revenue
 
growth
 
a
 
key
 
strategy,
 
particularly
 
LCL
 
FMCG
 
(every
 
day
 
freight
 
category)
Revenue
US$493m
     
(0.1)%
EBITDA
 
pre
‐
IFRS16
US$28m
  
7.3%
EBITDA
 
post
‐
IFRS16
US$39m
  

Page
 
17
The
 
Americas:
 
April/May
 
2020
 
Trading
 
(7
 
weeks)
Revenue
In
 
line
 
with
 
prior
 
year
Profit
 
before
 
Tax US$1m,
 
down
 
US$2m

Transport
 
revenue
 
declining
 
as
 
“stay
 
at
 
home”
 
rules
 
became
 
stronger

Stronger
 
Warehousing
 
activity
 
– deliveries
 
to
 
homes

Air
 
&
 
Ocean
 
activity
 
in
 
air
 
charters
 
inbound
 
assisting
 
revenue
 
improvement
 
–margins
 
slimmer

CaroTrans
 
impacted
 
at
 
revenue
 
and
 
PBT
 
level

Expecting
 
a
 
slower,
 
longer
 
recovery
 
from
 
our
 
US
 
business
 
compared
 
to
 
other
 
parts
 
of
 
our
 
network

Page
 
18
Asia

USA
 
import
 
tariffs
 
reduced
 
volume
 
ex
 
China

Hong
 
Kong
 
civil
 
unrest
 
also
 
impacted

Pandemic
 
with
 
Chinese
 
New
 
Year
 
shutdown
 
affected
 
fourth
 
quarter
 
earnings
 
and
 
revenue

Southeast
 
Asia
 
network
 
development
 
with
 
Japan
 
and
 
South
 
Korea
 
now
 
contributing
 
to
 
a
 
9
‐
country
 
network
 
in
 
the
 
region
Revenue
US$61m
     
(17.6)%
EBITDA
 
pre
‐
IFRS16
US$3.9m
 
(37.9)%
EBITDA
 
post
‐
IFRS16
US$5.4m
  

Page
 
19
Asia:
 
April/May
 
2020
 
Trading
 
(7
 
weeks)

Strong
 
air
 
charter
 
activity
 
assisting
 
–NZ
 
/
 
US

Spasmodic
 
sea
 
freight
 
movements,
 
multiple
 
“blank”
 
sailings,
 
increasing

Expecting
 
continuation
 
of
 
air
 
freight
 
activity
 
for
 
a
 
time
Revenue
Improvement
 
of
 
41%
Profit
 
before
 
Tax US$1.1m,
 
up
 
US$0.5m

Page
 
20
Europe

Improved
 
Warehousing
 
and
 
Transport
 
margin
 
management

Continued
 
investment
 
in
 
sales
 
and
 
network
 
capability,
 
both
 
Transport
 
and
 
Air
 
&
 
Ocean

Tilburg,
 
Barcelona,
 
Manchester
 
new
 
branches
Revenue
EU€401m
     
6.7%
EBITDA
 
pre
‐
IFRS16
EU€ 30m
  
27.1%
EBITDA
 
post
‐
IFRS16
EU€ 50m
  

Page
 
21
Europe:
 
April/May
 
2020
 
Trading
 
(7
 
weeks)

Easter
 
and
 
May
 
public
 
holidays
 
impacting
 
freight
 
volumes

Early
 
April
 
full
 
week
 
trading
 
saw
 
acceptable
 
revenue

Easing
 
of
 
lockdowns
 
across
 
EU
 
countries
 
is
 
seeing
 
more
 
freight
 
volume
 
enter
 
our
 
network

Air
 
&
 
Ocean
 
increased
 
air
 
freight
 
volume
Revenue
Declined
 
by
 
5%
Profit
 
before
 
Tax Break
‐
even,
 
down
 
EU€ 1m

Page
 
22
Land
 
&
 
Building
 
Development
 
Update:
 
F20
NZ$
 
MILLION
Total
 
Land
 
&
 
Buildings
 
Expenditure
 ‐
2020
111.7

Freight
 
facility,
 
Mount
 
Maunganui
24.2
 

Land
 
and
 
building,
 
Whangarei
4.3

Land,
 
South
 
Dandenong,
 
Melbourne
32.6

Warehouse
 
facility,
 
Epping,
 
Melbourne
24.0

Land,
 
Epping,
 
Melbourne
8.0

Land,
 
Adelaide
8.0

Sundry
 
Leasehold
 
Alterations
4.9

Sundry
 
other
 
property
5.7

Page
 
23
Capital
 
Expenditure
 
Update:
 
F21
NZ$
 
MILLION
Planned
 
Capital
 
Expenditure
80

Mount
 
Maunganui
 
completion
13

Spring
 
Creek,
 
Gore,
 
Levin
12

Epping
 
completion
11

Sundry
 
other
 
property
6

Non
‐
property
 
capex
38
NZ$
 
MILLION
Deferred
 
Capital
 
Expenditure
120

West
 
Auckland
27

Hamilton
 
Warehouse
10

Wellington
10

Mount
 
Maunganui
 
Warehouse
8

Auckland
 
CFS,
 
Queenstown
 
land 14

Sundry
 
other
 
property
 
NZ
4

Adelaide
36

South
 
Dandenong
1

Non
‐
property
 
capex
10

Page
 
24
Sustainability
2020
 
Annual
 
Report
 
will
 
contain
 
disclosure
 
of
 
our
 
global
 
carbon
 
emissions
 
inventories
 
under
 
ISO
 
14064
‐
1:2018
 
(for
 
calendar
 
years
 
ended
 
2019
 
and
 
2018)

Current
 
footprint
 
(2019
 
calendar
 
year)
  
is
 
1,662,867
 
tonnes
 
CO2
‐
e
 
per
 
annum,
 
of
 
which
 
97.68%
 
is
 
freight
 
related

Page
 
25
New
 
Zealand
 
Wage
 
Subsidy

The
 
New
 
Zealand
 
business
 
applied
 
for
 
and
 
was
 
granted
 
$10.6
 
million
 
in
 
wage
 
subsidies,
 
paid
 
on
 
16
 
April
 
2020

1,526
 
people

Excluded
 
Mainfreight
 
Air
 
&
 
Ocean,
 
and
 
executive
 
salaries

While
 
the
 
business
 
met
 
the
 
Government’s
 
qualifying
 
criteria,
 
we
 
have
 
chosen
 
to
 
return
 
the
 
full
 
amount

We
 
are
 
supportive
 
of
 
the
 
Government’s
 
wage
 
subsidy
 
measures

Page
 
26
Group
 
Outlook

The
 
result
 
of
 
the
 
past
 
year
 
is
 
satisfactory,
 
providing
 
P&L
 
strength
 
and
 
stability

Impact
 
of
 
pandemic
 
significant
 
in
 
April;
 
May
 
improving

Maintaining
 
operational
 
and
 
financial
 
disciplines,
 
no
 
matter
 
the
 
improvement

Sales
 
activity
 
strong

Watchful
 
for
 
future
 
economic
 
downturn

“Cautiously
 
optimistic”
 
for
 
Mainfreight,
 
in
 
the
 
words
 
of
 
our
 
friends
 
at
 
Harbour Asset
 
Management

Page
 
27
Financial
 
Calendar
 
F21
DATE
Annual
 
Meeting
 
of
 
Shareholders
30
 
July
 
2020
F21
 
–6
 
months
 
ended
 
30
 
September
 
2020
11 November
 
2020
Planning for
 
Investor Day
 
–Mt
 
Maunganui
14
 
October
 
2020
F21
 
–12
 
months
 
ended
 
31
 
March
 
2021
26
 
May
 
2021

Page
 
28
“There
 
are
 
exceptions
 
to
 
social
 
distancing”