Freightways (NZX:FRE) fared well in Q1 FY2021; Stock up by 4%

Summary

  • Freightways noted a sharp revenue decrease in the month of April 2020. However, by the end of the financial year 2020, it improved due to the volumes of Express Package.
  • FRE’s first quarter of 2021 witnessed strong trade and the revenue experienced an increase of 35% on pcp.
  • Even though the Company was heartened by the robust trading outcome during the Q1 of FY21, they are aware of the situation to remain uncertain in the future.

The Business mail and packaging service company based in New Zealand, Freightways limited (NZX:FRE) has been trading positively on NZX since last 2 days.

On January 7, by the end of the market session, Freightways was at NZ$10.70, up by 4.19% compared to previous close.

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COVID-19 impacts on the revenue

After the initial discrepancies witnessed in trade during the start of the COVID-19 related lockdown, the business has now stabilised.

As revealed by the Company on 29 October 2020, there was a sharp revenue decline witnessed in the month of April 2020. However, by the end of the financial year 2020, it improved owing to the volumes of Express Package.

The first quarter of 2021 witnessed strong trade and the revenue has seen an increase of 35%, in comparison with the same time last year. As compared to the previous year, the EBITA has witnessed a rise of 49%, to stand at $34.8m.

Further, NPAT was noted at $19.2m, 43% greater than the same time previous year. It is noteworthy that the last year’s first quarter was slow and organic growth in revenue was less.

With the total revenue (throughout the division consisting of Big Chill) witnessed a 46% growth, compared to the same time last year, reaching at $168m. The reason for this improvement is said to be the use of better operating techniques and the small margin return on housing deliveries. Consequently, the EP&BM EBITA was recorded 56% higher than the previous year, noted at $27.3 million.

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IM businesses in NZ and AU

The Information Management vertical of the business remains impacted by COVID-19 with many from the workforce of different New Zealand and Australian companies still working from their homes.

The margins improvement in the first quarter of FY2021 to EBITA standing at $7.9m, up by 33% was because of new activities such as cost control, digitisation, as well as medical waste management. In the places where coronavirus restrictions were slightly relieved, growth was witnessed.

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Outlook for FY 2021

The Company was of the view that even though they were heartened by the robust trading outcome during the Q1 of FY21, which demonstrated enhanced margin and market share profits, they are well aware that things would remain uncertain in future.

They also know that there might be slowdown in the volumes of Express Package, due to the slightest slackening of macro-economic developments.

They further said that in the case of Information management, revenue recovery shall happen only as and when people start returning to offices, resuming work over there like pre-coronavirus time.

Freightways FY2020 report reflected business heights touched amid the pandemic

In the annual report released on September 30, 2020 for the duration closed 30 June, the National Sales Manager for the company, Lorna Fisher said that they recorded new business heights due to the hands-on customer serving attitude and the hard work of the team.

Mark Verbiest, Freightways Chairman said that during the last quarter of FY2020, all the business units of the Company was called upon to giver essential services amid coronavirus induced lockdowns in both Australia and NZ regions. Combatting the difficulties, the company’s brands aided in picking, processing, and serving more than 20 million essential products for their consumers.

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