MFT, FRE: How are these 2 NZX logistic stocks faring in 2022?

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MFT, FRE: How are these 2 NZX logistic stocks faring in 2022?

 MFT, FRE: How are these 2 NZX logistic stocks faring in 2022?
Image source: Travel mania, Shutterstock.com

Highlights

  • The COVID-19 pandemic has severely disrupted supply chains worldwide.
  • Mainfreight posted a record result in FY22, registering a 47.2% rise in revenue.
  • Freightways saw lower volumes and higher operating costs in March and April 2022. 

The COVID-19 pandemic has severely disrupted supply chains worldwide, forcing supply chain leaders to reconsider and redesign the supply chain model.

Logistic companies like Mainfreight, Freightways, etc., had to face problems in finding extra space for inventories as firms kept high inventories due to lengthy delays while restocking. This created huge pressure on logistic companies.

Moreover, businesses also faced difficulties in recovering production due to the prolonged return of workforces, lack of staffs’ mobility and traffic constraints.

Source: © Mechanik | Megapixl.com

The COVID-19 pandemic has compelled firms to re-examine their supply chain approach. It has also called for firms to fast-track the implementation of digital supply network models and capabilities.

On this note, let’s see how these 2 NZX logistic companies have been performing this year.

Mainfreight Limited (NZX:MFT)

A leading logistic firm of NZ, Mainfreight, has a market cap of $7.5 billion.

Mainfreight posted a record result in FY22, registering a 47.2% rise in revenue and an 88.9% increase in net profit. The strong result was despite supply-chain disruptions and pandemic-imposed lockdowns.

Related Read: Mainfreight (NZX:MFT) posts best-ever results, profit up 89%

MFT also saw a high contribution to profits and growth in domestic Warehousing and Transport across its network globally. All 5 regions where MFT is located witnessed increased sales growth and profits.

A final dividend of 87cps will be paid on 22 July 2022. Supply chain congestion, a lockdown in Shanghai and the Russia-Ukraine war continue to pose challenges for the firm.

On 10 June, at the time of writing, MFT was trading at $74.65, down 1.75%.

Freightways Limited (NZX:FRE)

Leading freight company Freightways has a market cap of $1.65 billion.

The Group’s Express package volumes were 2% lower in February and March compared to pcp. Moreover, Omicron impacted the cost of operations substantially in these months due to an increased number of its staff in isolation.

ALSO READ: MFT, FRE, MOV: Why are these NZX logistics stocks in the limelight?

However, in May, the home isolation impact to limit the spread of Omicron has been successful with only a few COVID-19 cases each day now. Moreover, express package service levels are now at the highest point for last 2 years.

GOOD READ: AIA, AIR: 2 stocks to eye as government aims to make travel safer

FRE stated that it was operating in a high-cost environment with a tight labor market and sky-rocketing fuel prices. The Group also noted that these challenges can be mitigated post its implementation of an annual price adjustment on 1 July with the staff returning to operations.

On 10 June, at the time of writing, FRE was trading at $9.98, down 0.99%.

Bottom Line

Supply chains are critical in supplying goods and services quickly and securely as economies begin to restart. The reshaped supply chains of the future would need to be characterised by both flexibility and responsibility.

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

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