New-Zealand based courier and express delivery company Freightways (proposed ASX: FRW) has had a tough year in its home base operations. The Company had to endure a tight labour market, high labour costs, inflation, and disruptive weather, which raised operating costs and caused disruptions in their courier and temperature-controlled goods businesses.

Much like its “Moving you to a better place” tagline however, Freightways is gearing up to explore opportunities in a larger investor market across the Tasman, preparing for a dual-listing on the ASX, a decade after its initial float on the New Zealand Exchange (NZX). 

While the NZX remains its primary listing due to most of its business being in New Zealand, Freightways acknowledges the growing importance of Australia in its operations. Australian operations made 30% of Freightways’ total revenue in FY23. It expects Australian growth to eventually outpace New Zealand. 

Listing on the ASX also allows the Company to partner with Australian Fund Managers focusing on ASX-listed firms, broadening its investor base to match its business scope.

In FY23, the New Zealand market faced a slowdown from existing customers, but the Company had acquired new customers to offset the impact. Australia has been more resilient and significantly contributed to solid FY23 performance.

Freightways entered the Australian market in 2007 with the acquisition of information management company Databank and has since grown businesses related to information management, secure destruction, and waste management. The Group’s latest acquisition of Allied Express business in October 2022 has boosted its national presence in Australia, diversifying its earnings and reducing dependence on New Zealand’s economic performance.

The Company plans to expand Allied Express in Australia by automating facilities in NSW and Victoria to handle potential revenue doubling. This will allow capitalisation on market share growth without infrastructure constraints, whilst the Australian express delivery market is approximately eight times larger than New Zealand’s.

Freightways operates in four key segments: Express Package and Business Mail (EP & BM), providing overnight and same-day delivery, handling oversize parcels and airfreight; Temperature Controlled, offering refrigerated transport services; Information Management, delivering a range of digitalisation services; and Waste Renewal, specialising in medical waste collection and processing. 

ProducePronto, a key component of the Temperature Controlled division, is rapidly expanding nationwide, allowing the Company to remain closely connected to major fresh produce markets. Meanwhile, Stocka from its Information Management division is changing how Australian eCommerce businesses can expand into New Zealand. Stocka allows small-medium businesses (SMB) to store inventory in New Zealand and have Stocka’s Auckland team handle the management, packaging, and shipping of their products across the country.

While experiencing a surge in demand during the peak of the pandemic, the Waste Renewal division has now returned to its anticipated volume and growth levels. Anticipating future growth, the Company is making investments to expand these businesses, for example by developing a new medical waste facility set to open in Victoria in early FY24.

Collectively, the EP & BM and Temperature Controlled divisions. generated $908 million revenue in FY23, which was 80% of total group revenue. Meanwhile, the Information Management and Waste Renewal divisions collectively generated $214m, majorly due to a large project in New Zealand.

Overall operating revenue increased by 29% from last year, with the Australian businesses growing by 143% and New Zealand businesses increasing by 6%. Overall NPAT was lifted by 7% from $70.2 million in FY22 to $75.3 million in FY23. Freightways paid out a final dividend of 19 cents, taking the annual dividend to 37c, unchanged from the previous year. 

In FY24, Freightways has been investing to accommodate its growth capacity. This includes launching new facilities in Ruakura and Auckland for temperature-controlled logistics and same day deliveries. Additionally, Freightways also introduced a new Boeing 737-800 aircraft which will significantly improve air freight operations.

The NZ Express Package businesses will employ efficiency, pricing, and market share strategies to handle any volume decline. Freightways remains optimistic about its diversified businesses across a number of logistics segments in Australia and New Zealand – many of which are not directly tied to domestic New Zealand economic activity.

Freightways will start trading on the ASX from 14 September 2023.