Mainfreight Limited · NZX:MFT

Mainfreight — FY2018 Earnings Presentation

32 slides from Mainfreight's earnings presentation, May 2018

  1. Slide 1: Mainfreight Limited Full Year Result to 31 March 2018

    MAINFREIGHT LIMITED FULL YEAR RESULT TO 31 MARCH 2018

  2. Slide 2: Result Summary

    Result Summary Revenue up 12.2% to $2.62 billion (excluding FX up 10.6%) REVENUE An increase of $285.3 million Offshore revenues now exceed $1.95 billion EBITDA at $215.4 million, up 9.0% EBITDA Excluding FX up 7.9% Net surplus after tax before abnormal items up 8.8% NET SURPLUS to $112.2 million Co

  3. Slide 3: Business Highlights

    Business Highlights  Satisfactory financial performance  Our best ever result for Australia  Strong contribution from New Zealand  Gearing ratio reduction from 24.8% to 21.6%  Net debt reduction of $16.09 million to $196.85 million  Largest ever discretionary bonus of $20.70 million to be paid

  4. Slide 4: Dividend

    Dividend Final dividend of 26.0 cents per share DIVIDEND Books close 13 July 2018; payment on 20 July 2018 Total dividend for year 45.0 cents per share, increase of 4.0 cents (9.8%) over the previous year Page 4

  5. Slide 5: Capital Management

    Capital Management NZ$ MILLION THIS YEAR LAST YEAR Operating cash flow 140.2 131.2  Working capital increased by $12.8 million  Capital expenditure totalled $64.7 million, with Land & Buildings $20.1 million, Plant & Equipment $26.9 million, and Information Technology $17.7 million Major items of

  6. Slide 6: Capital Management: Capital Expenditure Expectations FY19

    Capital Management … Capital Expenditure Expectations FY19 NZ$ million NZ$ million Property Auckland Land 17.2 Whangarei Buildings 5.5 Blenheim Land/Buildings 5.0 Mount Maunganui Buildings 3.0 Other sundry Buildings 4.5 Total NZ 35.2 Melbourne (x2) Land 40.1 Adelaide Land 8.7 Melbourne Buildings 4.4

  7. Slide 7: Committed New Leases

    Committed New Leases New Zealand Australia Europe Americas New sites 4 7 4 3 Locations Auckland, Sydney Netherlands Chicago Mt Maunganui Melbourne Born Newark Wellington Brisbane Zaltbommel Toronto Blenheim Perth ‘s‐Heerenberg Newcastle Belgium Toowoomba Ghent Wollongong Total rent pa NZ$1.45m AU$9.

  8. Slide 8: Full Year Analysis: Revenue

    Full Year Analysis: Revenue $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 666,156 609,238 9.3%  Australia: AU$ 623,765 534,995 16.6%  USA: US$ 436,742 436,357 0.1%  Asia*: US$ 83,861 63,351 32.4%  Europe: EU€ 335,769 291,927 15.0%   Total Group: NZ$ 2,618,860 2,333,591 12.2% (excl FX) 10.

  9. Slide 9: Full Year Analysis: EBITDA

    Full Year Analysis: EBITDA $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 98,633 91,021 8.4%  Australia: AU$ 49,922 42,315 18.0%  USA: US$ 19,235 18,585 3.5%  Asia: US$ 4,905 6,245 (21.5)%  Europe: EU€ 17,713 17,179 3.1%  Total Group: NZ$ 215,416 197,542  9.0% (excl FX) 7.9%  Page 9

  10. Slide 10: Second Half Comparison: Revenue

    Second Half Comparison: Revenue 2nd HALF 2nd HALF $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 349,289 321,692 8.6%  Australia: AU$ 330,852 277,345 19.3%  USA: US$ 233,684 210,259 11.1%  Asia*: US$ 46,249 31,903 45.0%  Europe: EU€ 173,258 155,451 11.5%  Total Group: NZ$ 1,393,277 1,191,15

  11. Slide 11: Second Half Comparison: EBITDA

    Second Half Comparison: EBITDA 2nd HALF 2nd HALF $000 THIS YEAR LAST YEAR VARIANCE New Zealand: NZ$ 60,187 53,858 8.6%  Australia: AU$ 29,093 26,223 10.9%  USA: US$ 10,793 8,773 23.0%  Asia: US$ 2,880 1,966 46.4%  Europe*: EU€ 9,310 9,529 (2.3)%  Total Group: NZ$ 126,650 111,194  13.9% (excl F

  12. Slide 12: Domestic vs Air & Ocean Performance

    Domestic vs Air & Ocean Performance NZ$000 THIS YEAR LAST YEAR VARIANCE VAR ex FX Group Revenue 2,618,860 2,333,591 12.2%  10.6%  EBITDA 215,416 197,542 9.0%  7.9%  Domestic Revenue 1,586,881 1,367,510 16.0%  13.8%  EBITDA 161,744 141,797 14.1%  12.5%  Air & Ocean Revenue 1,031,979 966,081 6

  13. Slide 13: New Zealand

    New Zealand Revenue: $666m 9.3% EBITDA: $99m 8.4%  Strong contributions from all three divisions  Customers confident in utilising all products as they look for supply chain efficiencies  Kaikoura earthquake repairs still disrupting road and rail services  Longer road journeys and more coastal s

  14. Slide 14: New Zealand

    New Zealand  Transport  Sites under pressure as volumes outgrow capacity  New sites identified for Auckland (2), Mount Maunganui, Wellington, Nelson, Rotorua, Blenheim and Dunedin  Additional regional sites under consideration for Whakatane and Levin  Air & Ocean  Activity steady and climbing

  15. Slide 15: New Zealand

    New Zealand  Mainfreight 2Home  Volumes steadily improving  eCommerce / fragile freight delivery to home/business  New Zealand Outlook  Confident of current momentum continuing  Auckland and regional fuel taxes under review  Stronger development and promotion of all 3 core products to custome

  16. Slide 16: Australia

    Australia Revenue: $624m 16.6% EBITDA: $50m 18.0%  Best ever result from Australian business; best improvement across Group results  Sales growth from all 3 divisions  EBITDA improved in Transport and Logistics; Air & Ocean marginally behind year prior  Logistics  Volumes and customer base cont

  17. Slide 17: Australia

    Australia  Transport  Network intensified with opening of Bendigo and Toowoomba; Wollongong to follow shortly  Tasmania and Far North Queensland under consideration  Investigating other modes; rail and coastal shipping to reduce dependency on road  Chemcouriers business finding growth  Owens w

  18. Slide 18: Australia

    Australia  Outlook  Current revenue momentum expected to continue  Network and facility development may lower short‐term EBITDA growth expectations as sites become operational  Implementation of new Domestic Transport software platform successful (Mainstreet) Page 18

  19. Slide 19: The Americas

    The Americas Revenue: $437m 0.1% EBITDA: $19m 3.5%  Overall result still disappoints, but progress has occurred  Transport improving  Air & Ocean behind prior year; excluding last year’s one‐off airfreight project, revenue improving  Logistics, whilst still to find profit, is improving  CaroTra

  20. Slide 20: The Americas

    The Americas  Warehousing  Customer gains across all sites; customer enquiry strong  Warehousing footprint increase of 10,000m2  Small to medium‐sized businesses preferred to big box retail  Air & Ocean  Concentration on Mainfreight global trade‐lanes  European trade development pleasing  LC

  21. Slide 21: The Americas

    The Americas  CaroTrans  New leadership brings welcome change  Well‐defined strategy to improve quality and customer focus  Improving sales activities  Decentralised approach at branch level  Procurement strategy alongside Mainfreight Air & Ocean assisting  Global agency relationships improve

  22. Slide 22: Europe

    Europe Revenue: €336m 15.0% EBITDA: €18m 3.1%  Sales growth from all three divisions, however EBITDA performance better from Air & Ocean and Logistics  Logistics  Core sites remain well‐utilised and profitable  New ‘s‐Heerenberg NL facility (Meiland) yet to produce acceptable returns; focus is o

  23. Slide 23: Europe

    Europe  Forwarding/Transport  Two new cross‐docks in Belgium Genk – operational and reducing pressure on ‘s‐Heerenberg Ghent – under construction, occupation June 2018, to replace Ostend (outdated and poorly located)  Utilisation improving, but distribution margins are a work in progress  Expect

  24. Slide 24: Europe

    Europe  Air & Ocean  Satisfactory returns from developing network  USA strongest trade‐lane  Developing airfreight capability  Network intensification on target  Italy completed  Germany: Hamburg and Stuttgart to come  Stronger Asian trade‐lane development required  Procurement and shipping

  25. Slide 25: Europe

    Europe  Outlook  Expect short‐term Logistics EBITDA returns to plateau as new sites are developed  Born – from August 2018 onwards  Zaltbommel – from December 2018 onwards  Air & Ocean encouraging  Forwarding/Transport volumes and margins are key to stronger profit improvement Page 25

  26. Slide 26: Asia

    Asia Revenue: US$84m 32.4% EBITDA: US$5m (21.5)%  Inclusion of inter‐company revenue adjusts revenue increase to 12.1%  EBITDA result poor as gross margins decline  Senior leadership change effective mid‐year: Cary Chung, Hong Kong national, US‐educated  Core strategy – sole focus on Air & Ocean

  27. Slide 27: Asia

    Asia  Outlook  Expect first half to improve over year prior  Greater level of accountability and energy within Asian operations Page 27

  28. Slide 28: Strategic Initiatives

    Strategic Initiatives  Network intensity  Locally  Globally  People  Culture  Ownership / disciplines  Products are freight focused  Domestic transportation  Air & Ocean  Warehousing (Logistics)  Supply chain management – combination of all Page 28

  29. Slide 29: Strategic Initiatives

    Strategic Initiatives  Technology  Constant development of our customer‐facing technology  Mainchain Ultra (visibility tool)  Order Management System (OMS)  Shipment Centre  In‐house managed/developed  Uncomplicated  Long‐term management fundamentals/philosophy  Decentralised  Responsibili

  30. Slide 30: Group Outlook

    Group Outlook Expect continuing revenue and EBITDA improvement in all regions SHORT‐TERM Growth initiatives to continue Expect network development globally, and by country, to increase Benefits from growth/infrastructure initiatives include stronger sales MEDIUM TO and earnings profile (short term i

  31. Slide 31: Financial Calendar F19

    Financial Calendar F19 DATE Europe Investor Day 20 June 2018 Annual Meeting of Shareholders 26 July 2018 F19 – 6 months ended 30 September 2018 14 November 2018 F19 – 12 months ended 31 March 2019 28 May 2019 Page 31

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Mainfreight — FY2018 Earnings Presentation on 6ix