Currency gains 'play part' in Mainfreight record $88m profit

Mainfreight overcame a poor first-half trading period to book record annual after-tax profit of $88million, through strong performances during the year from its operations in New Zealand, Asia and Europe.

The New Zealand-greenback exchange rate "certainly played a part'' in the results, managing director Don Braid said.

"Such is the benefit of working across many regions and economies. We no longer rely on one geographical location for success,'' he said.

A total of 75% of Mainfreight's revenue and 56% of its earnings before interest, tax, depreciation and amortisation (ebitda) was earned outside New Zealand, he said.

"This is a satisfactory result, which builds on what was a poor first half for the 2016 financial year.

"Better management of overhead costs and an improving gross margin assisted the second half results,'' Mr Braid said.

He was confident the progress and momentum of the past six months would continue into the new financial year, he said.

Sales revenue for the year was up 11.2% at $2.28billion, of which foreign exchange gains accounted for 6.9%.

The $174.85million ebitda result, of which foreign exchange gains accounted for 4.4%, also set a new record, and represented a 7.8% increase over the previous year's result.

Forsyth Barr broker Peter Young said the earlier weakening revenue growth backdrop experienced by Mainfreight was compensated for later by its improved margin performance.

"Improved operating cash flows together with lower capital expenditure outlook suggests a greater cash focus near term as the company navigates some operational challenges in key markets,'' he said.

Mr Braid said New Zealand, Asian and European operations all increased their ebitda results, while Australia and the Americas recorded poorer results.

"Their domestic operations struggled to improve on the year prior. In all regions we were able to increase sales growth, as our teams continue to cross-sell our networks and products to our multinational customer base,'' he said.

Craigs Investment partners broker Peter McIntyre said Mainfreight had a good second-half recovery, particularly on the part of New Zealand and European operations, and had some momentum heading into the new financial year.

"Mainfreight has strong momentum in core New Zealand business, but mixed signs offshore, especially in Australia. But it's well positioned for continued growth,'' Mr McIntyre said.