Mainfreight Annual Shareholders Meeting 2020

MAINFREIGHT
 
LIMITED
ANNUAL
 
MEETING
 
OF
 
SHAREHOLDERS
30 JULY
 
2020
“Disruption
 
equals
 
Opportunity”

Page
 
2
A
 
quick
 
look
 
back
 
at
 
F20
 
...
8,631
 
Team
 
members up
 
552
 
282
 
Branches
up
 
22
26
 
Countries
up
 
2
 
(Spain
 
&
 
South
 
Korea)
Revenue
 
up
 
4.8%
 
to
 
$3.10
 
billion
 
(excluding
 
FX
 
up
 
3.6%)
An
 
increase
 
of
 
$141.31
 
million
PBT:
 
$206.25
 
million
Net
 
surplus
 
after
 
tax
 
before
 
abnormal
 
items:
 
$147.98
 
million
REVENUE
NET
 
SURPLUS*
GROWTH
“Done
 
&
 
Dusted”
PROFIT
 
BEFORE
 
TAX*
*
NZ GAAP figures: post-NZ IFRS 16

Page
 
3
Discretionary
 
Bonus /
 
Dividend
 
/
 
Earnings
 
Per
 
Share
Payable
 
at
 
Board’s
 
discretion
 
to
 
qualifying
 
team
 
members
 
(4,771
 
people)
$27.3
 
million,
 
in
 
line
 
with
 
prior
 
year
 
(for
 
payment
 
in
 
August)
Total
 
dividend
 
for
 
year
 
59.0
 
cents
 
per
 
share,
 
up
 
3.0
 
cents
 
or
 
5.4%
from
 
56.0
 
cents
 
in
 
the
 
previous
 
year
Adjusted
 
earnings
 
per
 
share
 
146.9
 
cents
DIVIDEND
EARNINGS
BONUS
“Share
 
our
 
profits”

Page
 
4
Contribution:
 
New
 
Zealand
 
vs
 
Offshore
Revenue
 
F20
Offshore75.7%
NZ24.3%
“Global
 
opportunities”
Profit
 
before
 
Ta x
 
F20
Offshore57.6%
NZ42.4%

Page
 
5
Performance
 
by
 
Division
 
–Our
 
3
 
Core
 
Products
Revenue:
$1.576
 
billion
up
 
8.6%
Profit
 
Before
 
Tax:
$119.36
 
million
Revenue:
$0.384
 
billion
up
 
10.1%
Profit
 
Before
 
Tax:
$34.32
 
million
Revenue:
$1.135
 
billion
down
 
1.8%
Profit
 
Before
 
Tax:
$52.57
 
million
WAREHOUSING
AIR
 
&
 
OCEAN
TRANSPORT
“More
 
to
 
do”

Page
 
6
Trading
 
Update:
 
Revenue*
NZ$000
THIS
 
YEAR
LAST
 
YEAR
VAR
 
%
New
 
Zealand
NZ$
268,594
265,348
1%

Australia
AU$
287,904
253,773 13%

Asia
US$
51,776
36,835 41%

Europe
EU
€
145,210
144,257
1%

Americas
US$
167,741
172,710 (3)%

Group
NZ$
1,188,638
1,094,297 8%
#

“We’re
 
keeping
 
busy”
May
 
actuals
 
plus
 
June/July
 
“weeklies”
17
 
weeks
 
of
 
trading
 
(1
 
April
 
to
 
26
 
July)
* Includes inter-company revenue#
Excluding FX: 5% over last year

Page
 
7
Trading
 
Update:
 
PBT*
NZ$000
THIS
 
YEAR
LAST
 
YEAR
VAR
 
%
New
 
Zealand
NZ$
16,721
18,098 (8)%

Australia
AU$
17,856
6,689 167%

Asia
US$
2,601
1,590 63%

Europe
EU
€
4,071
4,712 (13)%

Americas
US$
3,755
5,756 (35)%

Group
NZ$
53,242
44,242 20%
#

* Post-NZ IFRS 16#
Excluding FX: 18% over last year
May
 
actuals
 
plus
 
June/July
 
“weeklies”
17
 
weeks
 
of
 
trading
 
(1
 
April
 
to
 
26
 
July)
“It’s
 
the
 
long
‐
term
 
stuff
 
that
 
really
 
counts”

Page
 
8
Trading
 
Update:
 
Total
 
Company

Revenue
 
increase
 
of
 
NZ$94.3
 
million
 
includes:

Air
 
charter
 
opportunities
 
of
 
NZ$23.8
 
million,
 
but
 
at
 
lower
 
margin
 
levels

Other
 
new
 
business
 
of
 
$67
 
million
 
(Q1)

Profit
 
improvement
 
dominated
 
by
 
Australian
 
performance
 
assisted
 
by
 
our
 
exposure
 
to
 
multiple
 
economies
“Busy
 
people
 
get
 
things
 
done”

Page
 
9
Trading
 
Update:
 
New
 
Zealand

April
 
trading
 
saw
 
revenues
 
and
 
profits
 
decline
 
dramatically,
 
in
 
Level
 
4
 
lockdown

Post
‐
Level
 
4
 
lockdown
 
(May
 
to
 
July)
 
trading
 
has
 
improved
 
significantly,
 
and
 
YTD
 
revenue
 
now
 
just
 
ahead
 
of
 
prior
 
year

Expectations
 
for
 
this
 
trend
 
to
 
continue,
 
albeit
 
not
 
at
 
the
 
elevated
 
levels
 
post
‐
Level
 
4
 
lockdown

Expect
 
half
 
year
 
result
 
in
 
line
 
with
 
prior
 
year

All
 
divisions
 
contributing
 
with
 
market
 
share
 
gains

Page
 
10
Trading
 
Update:
 
Australia

Our
 
strongest
 
regional
 
performer,
 
with
 
expectations
 
for
 
the
 
current
 
results
 
to
 
continue

New
 
business
 
gains/market
 
share
 
assisting

Transport
 
network
 
performance
 
assisting
 
/
 
regional
 
branches

Current
 
COVID
‐
19
 
spike
 
and
 
increased
 
restrictions
 
have
 
not
 
disrupted
 
or
 
altered
 
freight
 
flow
 
and/or
 
volumes

Page
 
11
Trading
 
Update:
 
Asia

Benefit
 
of
 
PPE
 
shipments
 
April
 
to
 
June

Southeast
 
Asia
 
a
 
key
 
area
 
for
 
stronger
 
growth
 
and
 
development

COVID
‐
19
 
infection
 
rates
 
on
 
increase,
 
but
 
not
 
impacting
 
freight
 
volumes,
 
export
 
or
 
import

Some
 
restrictions
 
on
 
number
 
of
 
team
 
members
 
in
 
branches

Freight
 
volume
 
increases
 
ex
 
China
 
creating
 
space
 
availability
 
issues

Page
 
12
Trading
 
Update:
 
Europe

April
 
and
 
May
 
–tough
 
trading
 
conditions
 
experienced

June
 
and
 
July
 
–marked
 
improvement,
 
and
 
ahead
 
of
 
the
 
year
 
prior

Summer
 
holiday
 
period
 
(July/August)
 
now
 
underway,
 
with
 
the
 
expected
 
decline
 
in
 
volumes

COVID
‐
19
 
increases
 
seen
 
recently
 
do
 
not
 
appear
 
to
 
have
 
had
 
any
 
impact
 
on
 
trading
 
volumes

Page
 
13
Trading
 
Update:
 
Americas

Trading
 
remains
 
slow
 
for
 
Transport
 
and
 
CaroTrans
 
with
 
Warehousing
 
and
 
Air
 
&
 
Ocean
 
improving
 

Expect
 
the
 
Americas
 
to
 
take
 
longer
 
to
 
recover
 
as
 
COVID
‐
19
 
infection
 
levels
 
continue
 
to
 
increase

Customer
 
trading
 
is
 
improving,
 
however
 
converting
 
new
 
customers
 
is
 
taking
 
longer
 
than
 
expected

Page
 
14
Capital
 
Expenditure
Spent
 
in
 
2020
 
financial
 
year
$112
 
million
 
on
 
land
 
&
 
buildings
Expected
 
capital
 
investment
 
in
 
FY21
$120
 
million
 
deferred
FY22
 
spend
 
likely
 
to
 
increase;
 
dependent
 
on
 
trading
 
developments
$80
 
m
2022
$155 m
“Investing
 
in
 
our
 
growth
 
opportunities”

Page
 
15
Current
 
Net
 
Debt
Net
 
debt
 
of
 
$120
 
million
Gearing
 
ratio
 
at
 
11.1%
Undrawn
 
facilities
 
of
 
$220
 
million
Interest
 
Cover
 
and
 
Total
 
Debt
 
Cover
 
Ratios
 
remain
well
 
within
 
banking
 
requirements
NET DEBT
COVENANTS
“Money
 
is
 
for
 
making
 
things
 
happen”

Page
 
16
Netherlands: Zaltbommel Stage 2Completed: early 2020

Page
 
17
Netherlands: BornCompleted: 2018New solar installation

Melbourne: Epping IICompleted: June 2020

Mt Maunganui: MangatawaTargeted completion: August 2020

Page
 
20
Our
 
Customers

Top
 
industry
 
verticals
 
of
 
our
 
customers:

DIY/Homeware
16%

FMCG/Food/Beverages
15%

Technology/Electronics
11%

Retail
11%

Medical/Healthcare
7%
“Customer
 
perception
 
is
 
the measure
 
of
 
performance”

Page
 
21
Sustainability
Measurement
 
of
 
emissions:
 
calendar
 
2019

1.66
 
million
 
tonnes
 
CO
2
‐
e

97.7%
 
freight
 
related:
 
air,
 
road,
 
rail,
 
sea

Carbon
 
intensity
 
factor
 
improving/efficiency

Increase
 
likely
 
in
 
current
 
year
 
(airfreight
 
charter
 
activity)

Initiatives:

Electric
 
alternatives
 
– forklifts,
 
trucks,
 
other
 
vehicles

Solar
 
energy
 
/
 
green
 
building
 
construction

Recycling
 
/
 
waste
 
exchange
 
/
 
vegetable
 
gardens

Water
 
collection
 
/
 
usage

Customer
 
engagement
 
on
 
freight
 
mode
 
usage,
 
eg
 
rail
 
vs
 
road
“You
 
can’t
 
improve
 
what
 
you
 
don’t
 
measure”

Page
 
22
Global
 
Supply
 
Chain
 
Status

Air
 
freight:
 

Remains
 
volatile
 
and
 
expensive
 

Improving
 
from
 
March/April
 
levels

Sea
 
freight

Usage
 
improving
 
/
 
rates
 
increasing

“Blank”
 
sailings
 
causing
 
space
 
allocation
 
issues

Warehousing

Enquiry
 
on
 
the
 
increase

Outsourcing
 
for
 
customers
 
looking
 
to
 
offset
 
fixed
 
cost
 
of
 
owned
 
warehousing

Flight
 
to
 
quality
 
/
 
manufacturing
 
hub
 
diversity
 
–
multiple
 
countries
“Our
 
focus
 
is
 
on
 
making
 
things
 
better”

Page
 
23
Priorities
 
and
 
Actions

Strong
 
sales
 
focus
 
– retention
 
of
 
customers
 
and
 
gaining
 
of
 
new
 
customers
 
–high
 
priority

High
 
standards;
 
quality
 
services

No
 
COVID
‐
19
 
related
 
redundancies
 
for
 
our
 
permanent
 
team
 
members

Cash
 
flow/cash
 
collection
 
a
 
strong
 
focus

Cost
 
and
 
margin
 
management:
 
branch/national
 
level

Salary
 
review
 
implemented
 
1
st
July
 
2020

NZ
 
/
 
Australia
3.0%

Asia
1.6%

Europe/USA
Review
 
in
 
September
“We
 
have
 
work
 
to
 
do”

Page
 
24
Mainfreight
 
Corporate
 
Governance

We
 
are
 
proud
 
of
 
the
 
governance
 
that
 
guides
 
our
 
Company

We
 
do
 
not
 
blindly
 
follow
 
perceived
 
best
 
practice;
 
in
 
some
 
cases
 
the
 
interests
 
of
 
the
 
Company
 
and
 
its
 
shareholders
 
are
 
not
 
best
‐
served
 
by
 
those
 
guidelines

We
 
have
 
applied
 
the
 
principles
 
of
 
good
 
corporate
 
governance
 
and
 
adopted
 
robust
 
measures
 
that
 
support
 
our
 
efforts
 
to
 
grow
 
this
 
magnificent
 
Company,
 
for
 
the
 
benefit
 
of
 
our
 
team
 
and
 
shareholders
 
around
 
the
 
world,
 
for
 
the
 
next
 
100+
 
years
“One
 
size
 
does
 
not
 
fit
 
all”

Page
 
25
Corporate
 
Governance
 
– continued
 
...

Mainfreight’s
 
Board
 
of
 
Directors

Comfortable
 
with
 
current
 
level
 
of
 
six
 
directors

Tenure
 
and
 
experience
 
are
 
a
 
key
 
part
 
of
 
who
 
we
 
are
 
–at
 
Board,
 
Management
 
and
 
Team
 
level

Board
 
is
 
comfortable
 
with
 
the
 
independence
 
of
 
Simon
 
Cotter,
 
Bryan
 
Mogridge,
 
Kate
 
Parsons
 
and
 
Richard
 
Prebble

Somewhat
 
surprised
 
and
 
troubled
 
that
 
board
 
composition
 
is
 
a
 
topic
 
of
 
conversation,
 
when
 
facing
 
threats
 
of
 
current
 
pandemic
 
and
 
global
 
recession,
 
against
 
the
 
successful
 
formula
 
that
 
has
 
guided
 
us
 
profitably
 
for
 
a
 
very
 
long
 
time
“It
 
ain’t broke
 
mate”

Page
 
26
We
 
Continue
 
To
 
...

Be
 
positive
 
and
 
optimistic
 
about
 
the
 
year
 
ahead,
 
with
 
a
 
hint
 
of
 
caution

Believe
 
our
 
people,
 
culture
 
and
 
quality
 
are
 
key
 
differentiators

Want
 
to
 
be
 
useful
 
and
 
effective
 
for
 
our
 
customers

Seek
 
growth
 
and
 
intensity
 
for
 
our
 
network

Think
 
bigger
 
and
 
bolder,
 
no
 
matter
 
the
 
pandemic
 
and
 
economic
 
situations

Keep
 
thinking
 
and
 
acting
 
long
 
term

Maintain
 
current
 
strategic
 
direction
 
of
 
the
 
business
“Being
 
useful
 
feels
 
good”

Page
 
27
The determination, positivity and hard work ofour people has been nothing short of staggering;they deserve a huge thank you from all of us

---

MAINFREIGHT LIMITED

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
MAINFREIGHT – GLOBAL LOGISTICS





MAINFREIGHT LIMITED 
 
 
 
S
CRIPTED ADDRESS  
AND 
P
RESENTATION 
 
 
 
 
 25
th
 Annual Meeting of Shareholders 
 
4.00 pm, Tuesday 30 July 2020 

- 2 -

CHAIRMAN’S ADDRESS 
 
Welcome to our 42nd Annual General Meeting since our beginnings in 1978, and our 
25th since listing on the New Zealand Stock Exchange in 1996. 
 
The year ended March 2020 produced the continuation of ten consecutive years of 
record results: 
 
1. Record profits up $15M to $156M before abnormals. 
2.
 Global sales up $141M to $3.1 Billion – that represents sales close to $60M per 
week. 
3. Income tax payable for the year increased by $6M to $61M. 
4. The discretionary bonus payable to our worldwide team was unchanged at 
$27.2M. 
5. Our annual dividend paid to shareholders increased by 
$3M to $59M. 
 
The past year was another year of growth and we increased our number of branches 
worldwide from 260 to 282, and our presence from 24 to 26 countries. 
 
We are proud of our growth and achievements in the last 42 years. 
 
Climate change, together with the Covid
‐19 virus, creates challenges that the world 
has not faced in living memory.  The period ahead is what all of us as individuals, 
business, governments and countries must attempt to successfully deal with. 
 
Fresh drinkable water is one of the world’s climate change challenges; and one of our 
most valuable 
and yet neglected commodities, in big and small cities in almost all the 
countries in which we operate. 
 
It may be that the business community in many parts of the world could be a part of 
the solution to permanently fix local water shortages, in both volume and quality. 
 
The answer
 begins with business collecting all the rainwater, which falls on the roofs 
of their facilities. 
 
To give some idea of how much rainwater is available, at one Mainfreight facility in 
Auckland we: 
 
• Can catch 33 million litres of rainfall per annum with average rainfall of 1250mm. 
• Use 2 
million litres per annum flushing toilets, irrigating gardens and lawns, 
washing trucks, providing showers, and cafeteria use. 

- 3 -

• Let 31 million litres flow into the storm water system. 
• We probably have close to 10 times that catchment area in Auckland when we 
add in our other facilities, and therefore put 310 million litres of rainwater into 
the storm water drains, and out to sea, per annum. 
 
The difficult part of this proposal is how to harvest such large amounts of storm water 
for redistribution – but a multitude of solutions could be found. 
 
Perhaps the most important advance would be for the business community with large 
roofs and in areas with fresh water risk, to become self
‐sufficient for their own water 
use. 
 
A starting point could be for local councils to make it compulsory for new commercial 
buildings to be self‐sufficient for water, and creating a time line for existing businesses 
to become self‐sufficient. 
 
In our Annual Report, I said under Social Welfare – 
“We must commit to housing the 
poor.” 
 
Since writing that sentence, we have seen the appearance around the country of many 
struggling motels because of a lack of overseas tourists. 
 
It would seem an opportunity for councils and government to look at buying 
appropriate motels and making them permanent state accommodation
 for the right 
people. 
 
How do we see the year ahead? 
Your company has so far been fortunate to not have been as seriously affected as 
those businesses involved in travel and tourism.  Almost every year we have to cope 
with one or more earthquakes, droughts, floods, tidal waves, riots, 
snow, bush fires or 
volcanic eruptions occurring somewhere where we operate.   
We learn from all these, and have been aware for decades that somehow we almost 
always emerge stronger from them in the longer term.  In the last four or five months, 
three of the many lessons we have learned are:
 
 
1. We can sell our services over the phone to new customers.  Face to face calls are 
not always necessary. 
 
2. Our customers are sympathetic to any slightly reduced service levels because we 
communicate with them. 
 

- 4 -

3. Leadership, as we have seen in New Zealand, is vital to deal with serious adverse 
conditions. 
 
Deep in our culture is a strength to challenge and overcome whatever circumstances 
are put in front of us.  We are used to it, we enjoy it, and it is why we come to
 work. 
 
In closing, I would like to acknowledge and thank our global teams.  In every area of 
our operations – from frontline drivers to storemen, transport to sales, reception to 
administration, cafeteria to training, to new and old management – there is an 
incredible effort to succeed.   
 
Fellow shareholders, I
 now ask our Group Managing Director, Don Braid –announced 
at the end of last year as Deloitte’s CEO of the Decade – to give his presentation. 
 
 
Group Managing Director’s Presentation 
 
Please refer to separate PowerPoint slide presentation. 
 
 
   
For further information, please contact Don Braid, Group Managing Director,
telephone +64 9 259 5503, +64 274 961 637 or email don@mainfreight.com.