Freightways Group Ltd (ASX:FRW) Full Year 2025 Earnings Call Highlights: Strong Financial ...

Revenue: Increased by 6.6% to almost 1.3 billion. Net Profit After Tax (NPAT): Grew by nearly 13% to reach 80 million. Express Package Growth (New Zealand): 0.4% growth for the year. Express Package Growth (Australia): 11.6% growth for the year. Digital Revenue (Australia): Surpassed storage revenue for archives. Temperature Control Utilization: Peaked at 83% before the dairy dry-off season. Same Customer Transport Volume (Temperature Control): Down 5%. Document Destruction Volume: 56,800 tons of paper shredded and recycled. EBITDA Margin Improvement: More than 500 basis points increase in the Express Package sector. CapEx: Below 3% of revenue, focused on business as usual. Net Debt to EBITDA Ratio: Reduced from 2.7 times to below 2.4 times. Dividend: Increased by 8% to $0.40 overall for the year. Global E-commerce Business: Significant increase in volumes through the network. Allied Express Volume (Australia): Double-digit growth. Big Chill Earnings: Improved due to better utilization of the 3PL business. Information Management Digitalization Growth: 16% growth across New Zealand and Australia. Medical Waste Growth: 16% growth, with a focus on Victoria.

Warning! GuruFocus has detected 11 Warning Signs with ASX:FRW.

Release Date: August 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Freightways Group Ltd (ASX:FRW) reported a solid financial performance despite challenging economic conditions, with revenue growth of 6.6% and NPAT growth of nearly 13%. The company's diversification across New Zealand and Australia, particularly in Information Management and Express Package, has been beneficial, with significant contributions from the Australian market. Freightways Group Ltd (ASX:FRW) has a well-positioned balance sheet, with a reduction in net debt over EBITDA from 2.7 times to below 2.4 times, allowing for increased dividends. The acquisition of Allied Express in Australia has been successful, with impressive growth in volume and margins, contributing to the overall positive performance. The company is optimistic about future growth, with plans to expand revenue and earnings in FY26, supported by organic opportunities and strategic investments in infrastructure and technology.

Negative Points

The economic environment in New Zealand remains challenging, with modest growth in the Express Package segment and continued pressure on customer volumes. Freightways Group Ltd (ASX:FRW) faced margin pressures in its Information Management division, particularly in the Waste Renewal segment, which impacted overall earnings growth. The company is experiencing competitive pressures in the temperature-controlled logistics sector, affecting pricing strategies and customer retention. Freightways Group Ltd (ASX:FRW) has not disclosed specific earnings targets for some segments, creating uncertainty about the scale of expected improvements. The M&A landscape is challenging, with high pricing expectations from potential acquisition targets, delaying strategic expansion opportunities.

Story Continues

Q & A Highlights

Q: Can you elaborate on the Evolve phase one rollout and its implications for FY26? A: The Evolve phase one rollout focuses on credit control and invoicing, aiming to improve billing accuracy and efficiency. However, there are no significant financial impacts expected for FY26. The project will enhance strategic billing and courier remuneration processes, moving away from spreadsheets to a more robust system for the future. - Aaron Stubbing, General Manager - Express Package

Q: What were the one-off costs in the Waste Renewal segment, and do you have a target for earnings improvement in FY26? A: The $2.2 million one-off cost was related to historical WorkCover premiums. Our target is to double the earnings of the Waste Renewal division over the next two years, with a significant portion of that improvement expected in FY26. - Mark Troughear, CEO

Q: Can you explain the context of niche operators in the M&A strategy and the constraints faced? A: We focus on niche operators because they tend to have better margins and growth potential. Many businesses we consider have unrealistic pricing expectations, and family-owned businesses often wait for better earnings before selling. We remain disciplined and selective in our M&A approach. - Mark Troughear, CEO

Q: What are the pricing expectations for FY26 across different business segments? A: For NZ Express Package, we expect a net price increase of 3.6%. Allied Express aims for a 2.5% net increase, focusing on volume growth. Big Chill targets high 2% net increases, reflecting a competitive environment and customer retention focus. - Mark Troughear, CEO

Q: What are the cost pressures and planned rate increases for courier drivers? A: Across all personnel, including contractors and employees, rate increases will cap at around 3%. This aligns with our pricing strategy to manage cost pressures effectively. - Mark Troughear, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

View Comments