Freightways Grows Profit 9.5% Despite NZ Market Headwinds in HY25

Overview of HY25 Performance

Freightways Group Limited has released its half-year results for the period ending 31 December 2024, showcasing resilience in a still-challenging economic environment, particularly in New Zealand. The company reported a 6.7% increase in operating revenue to NZ$662.1 million and a 9.5% rise in net profit after tax (NPAT) to NZ$44.7 million. These gains were achieved despite subdued same-customer volumes in the NZ market, offset by pricing improvements and market share expansion.

Chief Executive Officer Mark Troughear highlighted strong service performance across all divisions, which helped secure new customers and mitigate recessionary pressures. Labour costs, a significant expense line, have stabilised after previous escalations, contributing to margin improvements.

Divisional Highlights and Strategic Initiatives

The Express Package & Business Mail (EPBM) division was a standout performer, with revenue up 5.8% and EBITA increasing 12% year-on-year. Market share gains were recorded in both New Zealand and Australia, supported by operational efficiencies from automation investments, particularly at Allied Express facilities. Notably, DX Mail also delivered strong growth through pricing and efficiency gains, while Big Chill improved utilisation of its Ruakura 3PL facility to 76%.

Information Management & Waste Renewal saw an 11.3% revenue increase, driven by digital services growth and a 20% rise in medical waste revenue, despite a delayed tender decision in Victoria. However, EBITA remained flat due to one-off costs including a NZ$1.2 million workers compensation back-payment.

Freightways continues to invest in Project Evolve, a multi-year initiative to modernise pricing, billing, and courier pay systems, with expected costs of NZ$5 million in FY25 and FY26. This project aims to enable more granular pricing based on effort and distance, reflecting the expanded geographic footprint of urban delivery networks.

Capital Management and Dividend Policy

The company maintains a disciplined capital management approach, targeting a solid investment-grade credit profile with net debt to EBITDA between 2.0x and 3.0x. Freightways declared an interim dividend of 19 cents per share, up 6% from the prior year, reflecting confidence in sustainable earnings. The dividend is fully imputed for New Zealand shareholders and will be paid on 1 April 2025.

Outlook and Market Conditions

Looking ahead, Freightways adopts a cautiously optimistic stance. The New Zealand economy is expected to provide only modest organic growth in the second half of FY25, while the Australian market shows slightly more buoyancy. The company’s focus remains on restoring margins and leveraging market share gains across divisions. Capital expenditure is forecast steady at NZ$35 million, supporting fleet upgrades, IT projects, and mechanisation.

Freightways is also progressing the transition of its airfreight fleet to more fuel-efficient Boeing 737-800 aircraft, anticipating one-off transition costs capped at NZ$2 million but longer-term operational savings. The company continues to monitor its partnership with Airwork closely amid operational challenges.

Management is actively assessing merger and acquisition opportunities in Australia to complement organic growth strategies, particularly in the express package and temperature-controlled segments.