Freightways Group (FRW) H2 2024 earnings summary

Executive summary

• Revenue reached NZD 1.2 billion (up 7.8%–8% year-over-year), driven by Allied Express, business diversity, and growth in express package businesses.

• EBITDA increased 2.5% to NZD 149 million, with margin improvements in some businesses but offset by higher labor costs and investments for growth.

• NPAT declined 5.8%–6% to NZD 70.9 million, mainly due to higher interest expenses and a NZD 1.5 million tax impact from policy changes.

• Dividend maintained at NZD 0.37 per share, reflecting stable capital management and confidence in future performance.

• Investments in automation, new facilities, and acquisitions are expected to drive future revenue, with most benefits to be realized in FY 2025 and beyond.

Financial highlights

• Labor costs rose 9.3% year-over-year, but increases are expected to moderate to 3.5% in FY 2025.

• Net debt/EBITDA post IFRS 16 at 2.7x, within the target range of 2x–3x.

• CapEx steady at NZD 35 million, with an additional NZD 5 million OpEx for IT and billing systems in both FY 2025 and FY 2026.

• Basic EPS decreased 7.7% to 39.8 cents.

• EBITA reached NZD 149 million.

Outlook and guidance

• Economic conditions remain tough, especially in New Zealand, with subdued volumes expected in H1 FY 2025 and potential for organic growth in H2.

• Profit growth is expected in FY 2025, with positive contributions from Big Chill and medical waste operations.

• Margin expansion anticipated through pricing strategies and efficiency initiatives, with Project Evolve benefits expected from FY 2026 and full impact in FY 2027.

• Management expresses cautious optimism for 2025 and readiness to pursue M&A opportunities.

• Capex to remain steady at NZD 35 million, focused on automation, IT, and mechanisation.