Transport firm Mainfreight says the rest of the year will be better after its earnings went backwards at speed in the first quarter.
Yesterday it reported a 51 per cent fall in profits to $4.02 million for the three months to June. The company indicated at its annual meeting that it had had a difficult first quarter and so it proved.
Managing director Don Braid said the first-quarter performance was not unexpected given the falls in freight volumes during the period. "During this time we have taken the opportunity to respond with better margin management, cost reductions and sales strategies all measures that will stand us in good stead for the future," he said. "Trading in July and August sees some improvement and it is our expectation that this will continue into the third and fourth quarters."
The latest profit was achieved on revenues of $261.67m, a 9.5 per cent fall on the same period a year ago. Operating earnings (ebitda) for the period, at $11.72m, were down 29.2 per cent. The company took abnormal costs (after tax) of $1.27m in relation to further restructuring. These abnormal items reduced overall profit to $2.75m, compared with a post-abnormals profit of $8.23m at the same time a year ago.
Mr Braid said that trading conditions were difficult in all the countries the company operated in during the first three months of the financial year.
The Mainfreight USA division, bought about 18 months ago, had a torrid time, with a $1.74m operating loss compared with a $2.2m operating profit at the same time a year ago. "Domestic freight volumes in Mainfreight USA continue to be depressed," Mr Braid said. When the Mainfreight USA business was taken over, the chief executive of that business, who was a shareholder, was retained along with other senior management, he said. However, in the past three or four months there had been several changes including the departure of the chief executive.
Mainfreight had brought in its own people to run the business, changed the structure, decentralised the operation and made it more sales and branch-management focused "as we run our business everywhere else in the world". "Basically we've got rid of bullshit corporate management in America," Mr Braid said.
He believed the Mainfreight USA business would be turned around. The key was achieving more sales in the American market. "We are aggressively hunting market share in that market right now. We've just got to do some hard work selling."
Mainfreight's other American business, Carotrans, had a solid quarterly performance, increasing operating earnings to $2.7m from $2.5m.
The New Zealand domestic operations produced operating earnings of $5.9m in the quarter, down from $8.2m in the same period last year. Volumes had improved during July and August, Mr Braid said. "Warehousing volumes continue to increase as customers begin to build stock inventories. "Domestic transport volumes are expected to increase as these inventories make their way to market."
Though the group performance during the June quarter had not matched last year's records, the group's New Zealand international, Australia international and Australia domestic operations had all performed better than in the same period in 2008.