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Highlights
- FRE experienced a solid FY21, but its results were impacted in Q1 FY22 due to a level 4 lockdown.
- The Company plans to advance its pricing for effort for its courier brands, grow its waste renewal business and looks for efficiency in information management.
- FRE plans to attain earnings growth in FY22.
Freightways Limited (NXZ:FRE) is a package, business mail as well as information management services provider in NZ and Australia.
FRE witnessed robust growth in FY21 with its revenue growing 27% on last year and crossing the $800 million threshold. This was partly due to the firm’s acquisition of Big Chill. The Group’s margins also showed improvement with EBITA and NPAT both growing at or over 30% YOY.
Image source: © 2021 Kalkine Media, Data source- EODHD/Others
However, FRE’s results were impacted in Q1 FY22 with lower revenue and EBITDA numbers amid a Level 4 lockdown in NZ.
The Board has also fixed the final dividend payment of 18 cents, taking the total dividend for the year to 33.5 cents.
DO READ: Are these NZX dividend payers going ex in November?
FRE conducted its annual shareholder meeting on 28 October and provided its approach to help customer growth, contractors’ incomes and achieve business goals.
FRE’s strategy to achieve its goals
Freightways plans to price its services that shows the effort needed to produce returns and remunerate contractors well. It also intends to leverage its service advantage to pick up market share in EP & BM.
It plans to enlarge temperature-controlled market share and create its 3rd sphere of growth in the market benefitting from the procurement of ProducePronto.
ProducePronto is a 4PL service operator that makes fresh and frozen food supply to convenience outlets in NZ and businesses across Auckland.
RELATED ARTICLE: Freightways (NZX:FRE) acquires Kiwi-owned ProducePronto
The Group had announced its acquisition of ProducePonto on 19 October. ProducePonto will be a part of its Express Package division with FRE taking possession of the same on 1 November 2021. The purchase price stands at $10 million with up to $4 million potential earn-out over 3 years.
FRE also proposes to grow digital services for information management clients in AU and NZ while executing its approach to add high-value waste streams to FRE’s collection and processing networks.
RELATED READ: How Freightways (NZX:FRE) is helping in waste sector growth?
Freightways is also involved in the waste renewal business. It is a 22% shareholder in Saveboard, which will increase to 36% in March 2022 once the Australia set-up begins. Saveboard is a great illustration of how waste materials can be altered with the right technology, combined with FRE’s ability to pick up and provide the feedstock via its customer reach.
On 8 November, at the time of writing, FRE was trading at $12.79, up 0.08%.
Outlook
FRE plans to achieve earnings growth for the Company in FY22. The Company continues to focus on improving margins, particularly in Australia, and continues to build momentum and profitability in NZ brands.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)