Post-lockdown deliveries drive Freightways' recovery

Thursday, 29 October 2020

Freightways owns several courier businesses and a trans-Tasman information management business.

Post-lockdown business has been booming for courier company Freightways.

The company, which operates New Zealand Couriers, Post Haste and Castle Parcels, told the NZX on Thursday that its revenue took a sharp decline in April as Covid-19 lockdowns took hold.

But by the end of its financial year its express package volumes had recovered and first quarter revenue this year was $211.7m, up 35 per cent on the same period last year.

Net profit for the quarter was also much higher, up 43 per cent to $19.2m, although the corresponding period had been soft.

* Freight firm says costs will rise due to Govt fuel tax hike

Revenue growth in the express package and business mail part of the business had been even stronger, up 46 per cent to $168m.

The results were boosted by improved margins on more efficient practices and the recent acquistion of Big Chill Distribution.

The only drag on the company continued to be companies in New Zealand or Australia which still had staff working from home, which was affecting its information management division.

The Auckland lockdown has meant couriers aren't delivering to local businesses on time.

Nevertheless, revenues in information management were 5 per cent higher than the same quarter last year at $43.8m.

Chief executive Mark Troughear said it was ‘’satisfying’’ to see how the company had been able to adjust to the new environment.

‘’We have found ways to mitigate activities that are still impacted by the Covid pandemic such as demand for trans-Tasman airfreight services, an increase in the proportion of B2C (business to consumer) deliveries and increased demand for medical waste services.

‘’We have been able to maintain our quality of service, gain market share, pay contractors more and strengthen our margins.’’

Last financial year Freightways’ profit fell by a quarter to $47.4m as courier volumes slumped ahead of lockdown, prompting the company to scrap its final dividend.

Chairman Mark Verbiest said that had been done to protect the firm’s balance sheet and in recognition that many staff had had hours or pay cut.

‘’Having said that, the board envisages a resumption of dividends in the current financial year, subject to a continuation of current trading conditions.’’

During lockdown, he said that business courier deliveries had slumped but home deliveries had risen to make up almost half of the work, falling back to about a quarter after the restrictions lifted.

A large number of charity boxes and care parcels had also been delivered at cost during that time.

Looking ahead, the company said the express delivery business were still vulnerable to any slow down in macro-economic activity, and the information management would remain depending on people returning to their offices, although its storage revenues were resilient.

Freightways shares were unchanged in mid-morning trade at $8.25, having traded within a range of 3 per cent in the last year.