Freight forwarding company Mainfreight is likely to increase its after-tax profit more than 40% and deliver a slightly increased dividend for its half-year to September result, brokerage ABN Amro Craigs has forecast.
The company, with expanded operations in Australia, New Zealand and the United States, delivered a $15.3 million after-tax profit for the corresponding period last year, and was forecast to increase that by 44% to $22.1 million, ABN broker Peter McIntyre said.
Increases in operating revenue of $605 million and earnings before interest, tax, depreciation and amortisation at $42.1 million were due to a consolidation of Australian business, where sales were up more than 60% and its purchase of Halford International for $A21 ($NZ24) million would boost its bottom line.
Mr McIntyre said the Halford acquisition was expected to deliver sales of more than $A65 million which would make the acquisition earnings positive on Mainfreight's balance sheet.
While the transport sector had been hard hit during the six-month period, having record prices for oil and petrol with which to contend, Mainfreight's margins were less affected.
Its owner-operated drivers absorbed most of the increased costs, as opposed to Mainfreight running its own fleet.
ABN maintained a "buy" recommendation on the stock, with a 12-month target price of $7.98 on the stock, which is trading around $4.70, having slid gradually from a high of $6.50 in May.
Mr McIntyre forecast its half-year dividend would increase from 8c per share last year to 10c, while its full year would increase from 18c to 20c.
While Australian operations would add scale and increase earnings, the strength of the Australian and United States dollars would also be a boost, but in New Zealand trading was excepted to be flatter, he said.
Mr McIntyre's financial disclosure document is available on request.
