A poorer-than-expected third-quarter performance by Mainfreight disappointed investors, who punished the shares yesterday despite the company saying its nine-month profit passed $100 million for the first time.
The shares fell nearly 7% as soon as the report was released on the NZX website, falling further through the day to close at $9.40, down 9.2%% on Monday's close.
In the nine months to December, Mainfreight reported operating earnings of $101 million, an increase of nearly 51% on the previous corresponding period.
The reported profit after taxation and abnormals was $46.7 million, an increase of 35% on the previous period. Excluding abnormals, the profit was a 36.4% increase.
Total sales increased 35.3% to $1.37 billion from $1.01 billion.
Operating cash flow at balance date was $64.3 million, compared to $45.8 million in the previous period.
Craigs Investment Partners broker Peter McIntyre said Mainfreight's Australian, international and the Asian businesses were disappointing in the third quarter.
"The markets had anticipated that all parts of Mainfreight's total business would be well ahead of the previous period."
Asked why investors had punished the company so heavily after it reported record earnings, Mr McIntyre said the operating profit was 11% below his forecast and the reported profit was 15% below forecast.
"The company has been a market darling for a long time and when those companies don't hit their targets they can be treated harshly."
Mainfreight's result had come the day after Freightways had reported earnings well above targets, he said.
Mainfreight had acknowledged the poor third quarter but analysts were now concerned about its European acquisitions.
Asia had been providing other companies with significant cash flow and revenue and although it was a small part of Mainfreight's total earnings, there was disappointment the Asian operations did not contribute more profit, Mr McIntyre said.
"The market will factor in the worst," he said.
Mainfreight managing director Don Braid said trading in the fourth quarter had begun well and he was confident of further improvements and increased trading through to the end of the financial year.
In addition, market share gains had been made across most business units providing increased confidence in trading levels through 2012 and 2013.
"Despite a lower-than-expected third quarter, we remain satisfied with this nine-month result. Market share gains and the continuing levels of profitability being experienced in all divisions early in this fourth quarter provide confidence for a satisfactory year-end result.
"More importantly, we remain well positioned for further growth during the 2012 and 2013 years."
