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, express package growth, and business diversity across New Zealand and Australia.

• 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 70–70.9 million, mainly due to increased interest expenses and a NZD 1.5 million tax impact from building depreciation 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

• Operating revenue rose to NZD 1,209.2 million, up 7.8% year-over-year.

• EBITDA (non-GAAP) increased 6.6% to NZD 229.1 million; EBITA (non-GAAP) up 2.5% to NZD 149 million.

• Labor costs rose 9.3% year-over-year, but FY 2025 labor cost increases are expected to be more moderate at 3.5%.

• 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.

Outlook and guidance

• Economic conditions remain tough, especially in New Zealand, with subdued volumes expected in the first half of FY 2025 and potential for organic growth in the second half.

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

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

• Labour cost increases anticipated to moderate; focus on restoring margins in FY25 and FY26.

• Capex to remain steady at NZD 35 million; NZD 5 million OpEx investment in new pricing/billing system planned for FY25 and FY26.