Shares in Mainfreight shot up 5.7% to $99.37 in early afternoon trading after it released a highly positive trading update in the wake of trans-Tasman covid restrictions.
The global logistics firm reported an 83% jump in profit before tax to $142.3 million from $77.7m for the comparable 22 weeks last year.
This was led by its American businesses reporting a fourfold increase in operational profits to US$27m from US$5.9m. Its smaller Asian operations spiked by 173% to US$8.9m, from US$3.3m in the comparable April to July period last year.
Total group revenue was up 43% to $2.2 billion, from $1.6b, led by a 72% improvement in air and ocean receipts, up 72% to $1.1b, from $646m.
Revenue from global transport operations was up more than a fifth at $887.6m, while warehousing was up almost a quarter to $225.3m.
Managing director Don Braid said while congestion continued to be a feature for both air and ocean operations, trading across all of the group’s regions and businesses continued to be ahead of last year.
New Zealand operations at $479.7m in revenue, up about a third on the comparable period, had been less impacted by current lockdown restrictions than expected. However, transport trading post lockdown is down about 30%.
Braid said general freight movements continued to be strong across Australia, despite the strong lockdown in New South Wales and “partial and varying” lockdowns in other states.
The company expected trading levels to ramp up heading into the Christmas trading period in NZ. That also applied to the US and “entire China and Southeast Asia region” over the next three months.
In a recent research note, Forsyth Barr analysts Andy Bowley and Matt Noland suggest that elevated global demand, paired with supply chain capacity issues, make “over earning” a feature across the logistics industry.
The analysts expect the “perfect storm” for global shipping, which has caused capacity constraints and pushed freight rates to elevated levels, to persist for the remainder of this year.
While they rated Mainfreight as a ‘neutral’ buy at current levels, they suggest there is scope for further upgrades as the year progresses.
The group’s half year results to September are expected to be released on Nov 11.