Europe woes hit Mainfreight

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Last updated 10:36 29/05/2013
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Don Braid
Mainfreight CEO Don Braid

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Transport and logistics group Mainfreight has announced an 18 per cent fall in net profit for the year to March 31, thanks to difficulties with its European division.

Net profit fell to to $65.91 million, down from $80.45m the previous year. The figure included pre-tax abnormal items of $3.32m, made up of costs associated with its acquisition of the European operation Wim Bosman in 2011, plus redundancy and legal costs.

Profit before abnormal items was $67.97m, up 3.4 per cent from $65.74m in the 2012 year.

Europe was the dark spot for the company, with a fall in earnings of more than 40 per cent. ''This is our most challenging business unit, as we confront and guide the business through a series of issues,'' Mainfreight said in a statement.

The problems included loss of key customers and poor economic trading, it said. Total sales remained steady at €244m (NZ$388m), but high fixed costs and the competitive environment led to a decrease in EBITDA (earnings before interest, tax, depreciation and amortisation) of 42.7 per cent.

However most other geographical regions fared better.

EBITDA in New Zealand improved 10 per cent to $53m.

During the year Mainfreight completed construction of two more rail serviced terminals, in Palmerston North and Invercargill, and land had been purchased to provide similar facilities in Hamilton, the company said. Meanwhile work had begun on the reconstruction of its Christchurch facilities.

Performance of the Australian operations had been satisfactory, although the Australian domestic operations had a poorer than expected last quarter with declines in margins.

In Asia it had expanded its network, and seen a 21 per cent increase in EBITDA, Mainfreight said.

It had a 10 per cent lift in EBITDA to US$16.9m (NZ20.1m) in the USA, but its expectations in that market had yet to fully materialise, it said.

The company will pay a final dividend of 15 cents per share fully imputed, bringing the full dividend for the year to 27 cents, up 3.8 per cent.

Mainfreight shares last traded at $9.70.

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- BusinessDay.co.nz

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