fisher funds annual roadshow august 2004. presentation introduction to freightways industry,...

Fisher Funds Annual Roadshow

August 2004

Presentation

Introduction to Freightways

Industry, business description and strategy

Financial performance

Recent events and outlook

Introduction

• Listed on the NZX September 2003

• Established in 1964

• Express package, mail, information management

• Approx. 7,000 retail and institutional shareholders

• Revenue $214m, EBITA $41m, NPAT $16m

A Survivor

• Freightways’ businesses have survived:

- Regulated / deregulated road transport industry

- Substitute services: fax machine and email

- Many competitors

- Three owners in the last two years

Express Package Industry Overview and Business Description

Express Package Industry

• Two segments to Express Package industry– Network couriers 90% of industry revenue– Point-to-point couriers 10%

• Services embedded in supply chains of businesses

• Consolidated industry structure

• Growth underpinned by demand for Just in Time supply

Business Description - Strengths

• Network of independent contractors

• Dedicated express package linehaul network

• Operational excellence and profit culture

• Experienced people

• Established multi-brand strategy

Multi-Brand Strategy

Price

Service

Three major brands:

– Differentiated by price and service

– Captures growth across entire market

– Provides defence against competitive threats

Freightways’ Network Courier Brands

Information Management and Business MailIndustry Overview and

Business Description

• Well positioned in each niche

• Offers a total information management solution

• Integrated with express package operations

• Records management growth opportunity

Information Management

Business Mail

• Niche player in deregulated postal services industry

• Postal deregulation enabled expansion of DX Mail

• Growth opportunities in business mail segment

• Drives volume to New Zealand Couriers

Business Strategy

• Revenue growth from existing and complementary markets:– Increase volumes from existing customers– Gain new customers– Achieve some price improvements

• Converted into strong earnings growth:– Ability to grow volume at low incremental cost– Volume growth drives efficiencies/productivity gains – Maintenance of margin integrity– Continued focus on cost control

• Explore incremental acquisition opportunities

Business Strategy

Financial Performance

• 10% revenue growth in 2004

• 5 year compound average revenue growth of 7%

Operating Revenue

-

50

100

150

200

250

Jun99 Jun00 Jun01 Jun02 Jun03 Jun04

Year Ended

$M

EBITA

• 27% EBITA growth in 2004

• 5 year compound average EBITA growth of 18%

-

5

10

15

20

25

30

35

40

45

Jun99 Jun00 Jun01 Jun02 Jun03 Jun04

Year Ended

$M

Recent Events and Outlook

Recent Events

• Transition to a listed NZ company Sept. 2003

• Acquisition of Archive Security

• Actual 2004 financial performance exceeded IPO forecasts on all fronts

Outlook

• Economy favourable from Freightways’ perspective

• No change expected in Freightways’ operating environment

• Sustained focus on core business / core strategies

• Business as usual

Summary

Strong successful business

Positioned to deliver continuing earnings growth

Delivering an attractive dividend yield