Mainfreight Limited · NZX:MFT

Mainfreight — FY2017 Earnings Presentation

29 slides from Mainfreight's earnings presentation, May 2017

1. Slide 1: Mainfreight Limited Full Year Result to March 2017

   MAINFREIGHT LIMITED FULL YEAR RESULT TO MARCH 2017

2. Slide 2: Result Summary

   Result Summary Net surplus after tax and before abnormal items up 17.0% to NET SURPLUS $103.2 million Revenue up 2.1% to $2.33 billion (excluding FX up 5.1%) REVENUE An increase of $48.8 million Offshore revenues now exceed $1.72 billion Another record EBITDA: $197.5 million; up 13.0% EBITDA Excludi

3. Slide 3: Business Highlights

   Business Highlights  Financial milestone – exceeding $100 million net profit for the first time  Strong contributions from New Zealand  Marked improvement from our Australian operations  Ongoing improvement and contribution from Europe  Gearing ratio reduction from 31.2% to 24.8%  Net debt red

4. Slide 4: Dividend

   Dividend Final dividend of 24.0 cents per share DIVIDEND Books close 14 July 2017; payment on 21 July 2017 Total dividend for year 41.0 cents per share, increase of 4.0 cents (10.8%) over the previous year

5. Slide 5: Capital Management

   Capital Management NZ$ MILLION THIS YEAR LAST YEAR Operating cash flow 131.2 130.3  Working capital increased by $10.9 million  Capital expenditure totalled $61.4 million Land & Buildings: $24.9 million, including:  Christchurch Air & Ocean facility $12.0 million  Sundry New Zealand property $3.

6. Slide 6: Capital Management … (FY18 capex expectations)

   Capital Management … Capital Expenditure Expectations FY18 NZ$ million Total Capital 112.1 Property Tauranga Land 15.0 Other sundry (Sth Island x2) Land 5.9 Other sundry Buildings 5.5 Total New Zealand 26.4 Melbourne (x2) Land 37.0 Adelaide Land 11.7 Total Australia 48.7 Total Property 75.1 Mainfrei

7. Slide 7: Full Year Analysis: Revenue

   Full Year Analysis: Revenue $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 609,238 563,245 8.2%  Australia: AU$ 534,995 503,256 6.3%  USA: US$ 436,357 457,760 (4.7)%  Asia: US$ 63,352 47,058 34.6%  Europe: EU€ 291,927 264,585 10.3%  Total Group: NZ$ 2,333,591 2,284,807 2.1%  (excl FX) 5.1%

8. Slide 8: Second Half Comparison: Revenue

   Second Half Comparison: Revenue 2ND HALF 2ND HALF $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 321,692 292,288 10.1%  Australia: AU$ 277,345 254,672 8.9%  USA: US$ 210,259 229,588 (8.4)%  Asia: US$ 31,903 25,408 25.6%  Europe: EU€ 155,451 133,815 16.2%  Total Group: NZ$ 1,191,154 1,170,66

9. Slide 9: Full Year Analysis: EBITDA

   Full Year Analysis: EBITDA $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 91,021 77,642 17.2%  Australia: AU$ 42,315 34,199 23.7%  USA: US$ 18,585 18,688 (0.6)%  Asia: US$ 6,245 6,349 (1.6)%  Europe: EU€ 17,179 14,223 20.8%  Total Group: NZ$ 197,542 174,847 13.0%  (excl FX) 15.3% 

10. Slide 10: Second Half Comparison: EBITDA

    Second Half Comparison: EBITDA 2ND HALF 2ND HALF $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 53,858 48,653 10.7%  Australia: AU$ 26,223 21,015 24.8%  USA: US$ 8,773 9,302 (5.7)%  Asia: US$ 1,966 2,804 (29.9)%  Europe: EU€ 9,529 8,323 14.5%  Total Group: NZ$ 111,194 103,265 7.7%  (excl F

11. Slide 11: Domestic vs Air & Ocean Performance

    Domestic vs Air & Ocean Performance NZ$000 THIS YEAR LAST YEAR VARIANCE VAR ex FX Group Revenue 2,333,591 2,284,807 2.1%  5.1%  EBITDA 197,542 174,847 13.0%  15.3%  Domestic Revenue 1,387,693 1,315,550 5.5%  8.4%  EBITDA 141,797 119,949 18.2%  20.1%  Air & Ocean Revenue 945,898 969,257 (2.4)

12. Slide 12: New Zealand

    New Zealand Revenue: $609m 8.2%  EBITDA: $91m 17.2%   Domestic and Logistics volume increased  Despite earthquake disruption, Domestic freight performance strong  Logistics warehousing utilisation much improved; new site required for Christchurch  Air & Ocean activity positive in sea and air;

13. Slide 13: New Zealand … (Technology)

    New Zealand …  Technology  Upgraded Domestic software – implemented 8 May  Disruption minimal  Improved screen technology, speed, visibility and freight management  Improved scanner technology deployed to Owner Drivers  Hardware upgrade and disaster recover facility moved  Expect main trunk r

14. Slide 14: New Zealand … (Outlook)

    New Zealand …  Customer gains continue OUTLOOK  Re‐opening of Picton/Christchurch rail line will be welcomed, reducing need for high cost road and coastal shipping services  April trading less than year prior due to timing of Easter and ANZAC holidays

15. Slide 15: Australia

    Australia Revenue: AU$535m 6.3%  EBITDA: AU$42m 23.7%   Strong performance from Domestic Transport and Logistics operations  Steady and improving performance from Air & Ocean  Domestic  Improving gross margins and better management of costs in second half  New regional branches planned to fur

16. Slide 16: Australia …

    Australia …  Logistics  All warehouses at maximum utilisation  New leased facilities under construction in Sydney  Land under offer in Melbourne to assist growth expectations  Additional capacity required in Brisbane  Strong beverage customer gains  Air & Ocean  Focused on developing Mainfre

17. Slide 17: Australia … (Outlook)

    Australia …  Expect our Domestic and Logistics momentum to continue OUTLOOK  Customer gains and revenue levels improving  April trading less than year prior due to timing of Easter and ANZAC holidays

18. Slide 18: The Americas

    The Americas  Revenue: US$436m (4.7)% EBITDA: US$19m (0.6)%   Overall result disappoints  CaroTrans: Revenue down 13.0% EBITDA down 8.4%  CaroTrans leadership change initiated  Renewed focus on sales and operational excellence

19. Slide 19: The Americas (Mainfreight USA)

    The Americas Mainfreight USA  Revenues down 1.2%; EBITDA up 5.7%  Airfreight volume declined  Poor onboarding quality of domestic freight  Domestically:  Road line‐hauls gaining traction and improving utilisation; we continue to target every day LCL freight volume  New customers being secured

20. Slide 20: The Americas … (Outlook)

    The Americas … OUTLOOK  Domestic quality and on‐boarding of customers improving MAINFREIGHT and expect results to reflect this  Air & Ocean growth continues OUTLOOK  Improvement will take time CAROTRANS  CaroTrans remains an important part of our US presence

21. Slide 21: Europe

    Europe Revenue: EU€292m 10.3%  EBITDA: EU€17m 20.8%   Growth has come from all three divisions  Sales development/pipeline continues to be strong  Gross margins improving via better warehouse and truck utilisation  Logistics  Warehousing utilisation at optimal levels with overflow in short‐te

22. Slide 22: Europe … (Forwarding & Transport)

    Europe …  Forwarding & Transport  Improving quality and sales gains assisting across network  New cross‐dock facilities for Genk and Ghent/ Zwijnaarde (BE) in 2018 financial year  Will assist growth and efficiencies  Planning underway for a further cross‐dock to service The Netherlands  Ignore

23. Slide 23: Europe … (Air & Ocean)

    Europe …  Air & Ocean  Steady sales growth across all branches  UK and German locations profitable and requiring in‐country branch development  Manchester / Hamburg / Munich / Stuttgart / Dusseldorf  Trade lane focus strong for USA and Asia  Likely to open in Italy in the near future

24. Slide 24: Europe … (Outlook)

    Europe …  Expect current financial improvements to continue OUTLOOK  Breakeven expectations for new Netherlands warehouse  Business confidence improving in the region  Expect Mainfreight branding to bring consistency across the full network

25. Slide 25: Asia

    Asia Revenue: US$63m 34.6%   EBITDA: US$6m (1.6)%  Disappointing EBITDA result  Air export volume deteriorated over prior period  Additional costs incurred to develop HK warehouse opportunity  Prior to inter‐company revenue eliminations, total revenue increases 7.3%  Inter‐company revenue red

26. Slide 26: Asia … (Outlook)

    Asia …  Expecting first half results to be below those of the prior OUTLOOK year  Expect small EBITDA improvement by year end

27. Slide 27: Group Outlook

    Group Outlook  Sales growth continues to be a key focus for all business SHORT‐TERM units in all regions  Confident of the improvements we are seeing in Australia and Europe  Where we have confidence in regions, more capital will be MEDIUM TO invested in network enhancement LONG‐TERM  Larger mul

28. Slide 28: Governance

    Governance  Board now numbers eight Directors, with the 1 January 2017 addition of Kate Parsons and Sue Tindal  Kate: broad financial, analytical and IT skills; international and local commercial experience; high‐tech industry knowledge; M&A/change management  Sue: senior roles in financial servi

29. Slide 29: Financial Calendar F18

    Financial Calendar F18 RELEASE DATE Annual Meeting of Shareholders 27 July 2017 F18 – 6 months ended 30 September 2017 15 November 2017 F18 – 12 months ended 31 March 2018 29 May 2018

Mainfreight — FY2017 Earnings Presentation on 6ix