Mainfreight suffers weakening Australian margins

NZ international firm feels costs burden outweighing revenue rises

Mainfreight suffers weakening Australian margins
Mainfreight is pushing on despite headwinds.


Mainfreight is working to reduce its Australian transport business costs and expects to see the fruits of that effort in the next financial year.

Australian sales revenues rose 2.6 per cent over the previous year to A$503.26 but gross earnings were down 8.2 per cent to A$34.20 million, the New Zealand-based company reveals in its full-year results – a percentage performance effectively reversed in its US business.

In contrast, group revenue was up 11.2 per cent to NZ$2.28 billion (A$2.13 billion), gross earnings were a record NZ$174.84 million and net profits were up nearly 3 per cent to NZ$87.6 million from NZ$82.5 million.

"Positive revenue growth in Australia was outweighed by weaker gross margin performance and overhead cost increases," it says, adding: "Concerted efforts to drive sales growth and to secure better control of costs during the latter part of the financial year, achieved improvements which will carry forward into the 2017 financial year."

Mainfreight notes its new Melbourne and Perth facilities are now occupied.

In the former, warehouse utilisation ahead of expectations but transport has only just moved in.

For Perth, managers are improving quality and capacity performance.

Meanwhile, the domestic software upgrade is to be completed after New Zealand implementation.

The transport-arm’s woes were not reflected in its logistics and air and ocean businesses, where the opposite was the case, though it recognises room for improvement.

"The Logistics team has attracted a number of higher-profile, high-activity warehousing customers during this period, improving our utilisation levels," Mainfreight says.

"The Air & Ocean business has also concentrated on the Mainfreight global network for trade-lane activity. Their control of European import freight has allowed us to open a new operation in the United Kingdom.

New facilities in Perth and Melbourne have provided high-quality capability for future growth.

"Melbourne’s Epping facility is our largest ever investment in buildings, both in terms of scale and value.

"Lifting the level of quality in the Australian market remains a significant goal.

We are positive about our growth prospects in Australia.

"Our market share remains small in comparison to the incumbents; a focus on high quality freight services will see further growth achieved."

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