The Freightways result for the six months to December has been disappointing for brokers, and management has signalled expectations of continued economic volatility and only a "gradual" trading improvement.
Freightways brands are New Zealand Couriers, Post Haste Couriers, Castle Parcels, NOW Couriers, SUB60, Security Express and Kiwi Express.
Normalised operating revenue for the first half was 4% down at $165 million; earnings before interest, tax and amortisation were down 10% to $27 million and after-tax profit was down 8% at $14.5 million.
Freightways shares traded down more than 4.5% at $3.07 after the announcement, while Mainfreight, which reports on Thursday, saw its shares decline about 1.5% to trade about $5.79 yesterday.
Craigs Investment Partners broker Peter McIntyre said the Freightways report was "disappointing", given Freightways' $14.5 million after-tax profit was down 11.6% from Craigs' $16.4 million forecast.
Although group revenues showed an improvement, from being in decline and down almost 5% in the first quarter, this had improved in the second quarter to being down 2.6% "but that indicates a fairly weak performance in the busy Christmas quarter", Mr McIntyre said.
Freightways chairman Wayne Boyd said in a statement the fluctuating customer activity evident through the early and mid-2009 calendar year improved towards its end.
"While volumes remain lower than the previous year in some of our businesses, encouragingly, this is not the case across the entire division.
"Until, however, a more broadly based performance improvement is evidenced, we anticipate the recovery of the economy, and how it translates into the performance of Freightways express package businesses, will be gradual," Mr Boyd said.
Forsyth Barr broker Peter Young said although trading conditions were showing slight improvements, they were still slow and it was "too early to back a sustained recovery".
"The [7c] dividend was lower than hoped and reflects the dilution impact of last year's capital raisings.
"Freight pricing has declined due to the removal of fuel surcharge," he said.
Freightways' interim dividend had been cut from 8c to 7c, a $10.8 million payment, but Mr McIntyre and Mr Young were both disappointed with the management decision to make the dividend cut.
Mr McIntyre noted the company had indicated some improvement, but cyclical recovery would be gradual.
Yesterday's operating result implied a downgrade to full-year 2010 forecasts by analysts, he said.
Freightways' board is changing as resigning Warwick Lewis is replaced on March 24 by lawyer, former Telecom executive and Securities Commission member Mark Verbiest.
