Kiwi-owned firm ditches parcel freight and invests in facilities as earnings forge ahead
Mainfreight has seen its net profits soar 36 per cent to NZ$89.64 million in what turned out to be a busy year internally that appears to have paid off.
Only the New Zealand-owned international transport and logistics firm’s Europe arm failed to boost revenue but the company is confident this was turning around given gains in the second half.
Remedial activities included:
- removing parcel-freight from its Australian Transport business, where these volumes were hurting gross margins, cost structures and network efficiency
- closing an unprofitable operation in Belgium, rationalising its network coverage to improve margins
- in the US, the Mainfreight Domestic operations have focused on everyday LTL freight, “sacrificing revenue streams from transactional freight to build long-term customer relationships and to assist the implementation of dedicated road linehaul between significant branch locations”.
Australian revenues rose 5.8 per cent over the previous year to A$458.47 million, with the second half up 21.1 per cent compared with last year’s second half.
Gross earnings improved 15.5 per cent to A$35.19 million.
“Over time small parcel consignments had infiltrated our normal freight profile,” the company says about the need for intervention in Australia.
“This reached a tipping point halfway through the last financial year, when inefficiencies placed unacceptable pressure on our network and margins.
“As a consequence, we removed parcel traffic from our network, in consultation with our customers.
“The value of the consequential lost sales approximated A$12 million annualised.”
A certain bullishness attends its view of Australia, especially for its logistics and its Air & Ocean arm’s operations, which have seen investment in new facilities, such as the 13,250 square metre centre in Sydney and 12,790 sqm Brisbane facility.
“Our investment in perishable handling facilities across Melbourne, Sydney and now Brisbane has given us a considerable advantage over our competitors,” Mainfreight says.
“We now expect further improved financial returns in Australia notwithstanding the cost commitments we have incurred with the investment in new facilities to secure this business’s potential growth.”