Freightways has slightly improved its operating performance during the past quarter to September, but retains a cautious outlook based on a continued slow economic recovery.
Shareholders were told at its annual meeting in Christchurch yesterday by its chairman, Wayne Boyd, that although the overall 2010 result was below the previous year, the after-tax profit at $29 million being down 2%, the company's performance had progressively improved as the year unfolded, as seen in the improved second half result.
"Overall, Freightways has demonstrated its resilience throughout the economic downturn," he said in a statement.
Following the meeting and release of a trading update yesterday, Freightways shares were trading slightly down at $3.06.
Craigs Investment Partners broker Peter McIntyre noted many businesses had retained profitability during the past two years by internal cost-cutting, but this did not aid top-line earnings growth.
"The economy is very sluggish. Freightways is a barometer of the economy, and that was mirrored in the Reserve Bank holding the official cash rate [at 3%] yesterday," he said.
Freightways managing director Dean Bracewell cautioned that the company anticipated a continuing slow domestic economic recovery.
"While a number of encouraging signs continue to emerge in some of our businesses, this is not yet the case across all businesses. As such, we must remain cautious in the outlook for our core express package and business mail division," Mr Bracewell said.
Freightways' revenue for the quarter to September was up 4% on the same time last year at $85 million and its earnings before interest, tax and goodwill amortisation was up 3% at $13 million "These operating results most importantly demonstrate that, despite a difficult operating environment, Freightways has been able to slightly improve," he said.
Mr Bracewell said while Freightways' operating performance had improved during a difficult trading period, its after-tax profit was down 4% at $6.7 million "due to the higher cost of bank margins in this period compared to the previous corresponding period".
Commercially, the Canterbury earthquake's effect on Freightways would not be material, although all operations were affected.
Forecast 2011 capital expenditure of $13 million is similar to 2010 levels.
