How is Mainfreight (NZX:MFT) coping with Omicron effects?

Highlights

• Mainfreight provided a trading update on 2 February.
• The Group has reported satisfactory YTD results, but Omicron-related curbs have impacted service levels.
• The Group on 26 May is due to release its financial results for the year to 31 March 2022.

Auckland-based logistics supplier Mainfreight Limited (NZX:MFT) provides managed warehousing and freight forwarding services. The Group released its trading update on 2 February, informing the market on the impact of Omicron outbreaks and supply chain congestion on the business.

The update was provided for 9 months, covering a period of 1 April 2021 - 31 December 2021 and weekly financial data for January 2022. MFT witnessed an increase of 45% and 85% on pcp in the above-mentioned period to $4.1 billion and $0.37 billion in revenue and profit before tax, respectively.

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The Group’s financials showed improving financial performance across various regions, showing increased freight volumes and trends. However, Omicron/COVID-19-related disruptions have impacted service levels in certain regions.

Moreover, international shipping and airfreight continue to be affected by congestion, and freight rates have stayed on a higher side as demand continues to exceed supply.

MFT’s Regional performance

In New Zealand, MFT reported a 34% increase in revenue this year on pcp to $902 million. The Group’s warehouse business experienced the highest demand as customers increased their stock. Domestic transport, as well as Air & Ocean freight, demand stayed on a higher side.

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However, absenteeism continued due to the Omicron outbreak after MFT implemented the vaccination mandate on 17 January 2022.

In Australia, MFT’s transport business was impacted due to Omicron infection and restricted services in Sydney between late December 2021 and January 2022. However, service levels have improved with volumes likely to stay robust.

Warehousing volumes also remain steady with new construction going on in certain regions of Australia.

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MFT’s Europe operations stayed satisfactory and financial performance has been good.

Air and Ocean volumes rose substantially in Asia with elevated volumes in the Americas as well. However, port congestion and restricted container equipment supply remains a concern in these 2 regions.

Globally, air and ocean trade lanes stay clogged while shipping lines continuing to give spaces on availability basis.

On 10 February, at the time of writing, MFT was trading at $86.85, up 0.12%.

Road ahead

MFT’s key objective is to fulfil its customer service needs while navigating constraints arising due to Omicron-administered absence. The Group is pursuing increased safety protocols, contactless delivery and split shifts into its warehouses to prepare for COVID-19-related interruptions.

The Group is due to release its financial results for the year to 31 March 2022 on 26 May 2022.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)