Global carrier Mainfreight has delivered an improved profit, but below analysts' consensus and with foreign currency losses undermining otherwise gooddivisional performances.
Mainfreight appears to have ridden through a two-month flat spot, during August and September, and remains upbeat it can achieve more than $2 billion in revenue for the full year, which would boost earnings from the previous year.
Craigs Investment Partners broker Peter McIntyre, said the result was ''not bad, but below expectations'', with disappointment from Europe and also CaroTrans, an independent US subsidiary.
While adjusted after tax profit of $33.7 million was up on a year ago, Mr McIntyre said it was 8% below the consensus of analysts.
''Foreign exchange impacts explain some of the miss on expectations, while Mainfreight said that after a solid start to the half, its performance in August and September was below expectations,'' Mr McIntyre said.
Revenue was up 7.8% to $987.1 million, earnings before interest, tax, depreciation and amortisation (ebitda) improved 13.1% to $69.30 million and after tax profit was up 16.7% to $33.65 million, for Mainfreight's six months trading to September.
Additionally, there was a one-off gain of $11.96 million from the settlement of a dispute with the previous owners of Wim Bosman, purchased by Mainfreight for $205 million in 2011.
However, currency losses worked against Mainfreight, with the company noting the 7.8% gain in revenue, if including currency effects, was pushed down to 3.6% and similarly, the 13.1% ebitda gain, was driven down to 9.4%.
Mainfreight shares were down 6c after the announcement, trading at $15.99.
Forsyth Barr broker Andrew Rooney said while Mainfreight reported a 13% profit increase, it missed elevated market expectations due to soft performances at CaroTrans and sub-trend growth in Australia.
''Elsewhere, business momentum continues with local currency revenue growth and further margin expansion evident in every division,'' Mr Rooney said.
He highlighted management's reference to strong peak season volumes across New Zealand, Australia, Asia and the US.
''This bodes well for a stronger second half, albeit market expectations may still need to be moderated,'' Mr Rooney said.
Mr McIntyre said around Australasia, New Zealand continued to be the cornerstone of Mainfreight's profitability, with revenue up 5% and ebitda up 8%.
He highlighted that Mainfreight had a soft first half for 2014, which provided a relatively easy comparison to the previous year.
The weakening New Zealand dollar would benefit Mainfreight, he said.
Around Mainfreight's ''rest of world'' operations, Mr McIntyre noted Asia sales were up 17% and in the US, excluding currency issues, ebitda was up 19%.
''Structural changes contributed to Mainfreight's US operations improving significantly, with ebitda up 70%.
''However, this was partially offset by CaroTrans, which had a disappointing first half, with ebitda down 14% as margins contracted,'' he said.
Excluding currency issues, European sales increased 4.1% and ebitda was up 31% on a year earlier, but Mr McIntyre noted this was against a weak comparison period the previous year.
• Mainfreight bought Netherlands-based Wim Bosman and its 14 branches in six European countries in early 2011 for $NZ205 million and later retained a $17 million earn-out payment because of underperformance.
At the heart of the matter was Mainfreight's allegation Wim Bosman did not disclose during pre-purchase due diligence that a distribution contract with a global cycle manufacturer was coming to an end.
Due in part to the European funding crisis and recession at the time, Wim Bosman had performed well below analysts' expectations.
