Mainfreight Limited — AGM Information 2020

Jul 30, 2020

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MAINFREIGHT LIMITED ANNUAL MEETING OF SHAREHOLDERS 30 JULY 2020

“Disruption equals Opportunity”

A uick look back at F20 … q

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GROWTH
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8,631 Team members up 552 282 Branches up 22 26 Countries up 2 (Spain & South Korea)

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REVENUE
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Revenue up 4.8% to $3.10 billion (excluding FX up 3.6%) An increase of $141.31 million

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PROFIT
BEFORE TAX
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PBT: $206.25 million

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NET SURPLUS
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Net surplus after tax before abnormal items: $147.98 million

• NZ GAAP figures: post-NZ IFRS 16

“Done & Dusted”

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Discretionary Bonus / Dividend / Earnings Per Share

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BONUS
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Payable at Board’s discretion to qualifying team members (4,771 people) $27.3 million, in line with prior year (for payment in August)

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DIVIDEND
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Total dividend for year 59.0 cents per share, up 3.0 cents or 5.4% from 56.0 cents in the previous year

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EARNINGS
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Adjusted earnings per share 146.9 cents

“Share our profits”

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Contribution: New Zealand vs Offshore

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Revenue F20 Profit before Tax F20
NZ NZ
24.3% 42.4%
Offshore Offshore
75.7% 57.6%
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“Global opportunities”

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Performance b Division – Our 3 Core Products y

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TRANSPORT
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WAREHOUSING
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AIR & OCEAN
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Revenue: $1.576 billion up 8.6% Profit Before Tax: $119.36 million Revenue: $0.384 billion up 10.1% Profit Before Tax: $34.32 million Revenue: $1.135 billion down 1.8% Profit Before Tax: $52.57 million

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“More to do”

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Tradin U date: Revenue* g p

May actuals plus June/July “weeklies” 17 weeks of trading (1 April to 26 July)

NZ$000		THIS YEAR	LAST YEAR	VAR	%
New Zealand	NZ$	268,594	265,348	1%	
Australia	AU$	287,904	253,773	13%	
Asia	US$	51,776	36,835	41%	
Europe	EU€	145,210	144,257	1%	
Americas	US$	167,741	172,710	(3)%	
Group	NZ$	1,188,638	1,094,297	8%#	

* Includes inter-company revenue # Excluding FX: 5% over last year

“We’re keeping busy”

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Tradin U date: PBT* g p

May actuals plus June/July “weeklies” 17 weeks of trading (1 April to 26 July)

NZ$000		THIS YEAR	LAST YEAR	VAR	%
New Zealand	NZ$	16,721	18,098	(8)%	
Australia	AU$	17,856	6,689	167%	
Asia	US$	2,601	1,590	63%	
Europe	EU€	4,071	4,712	(13)%	
Americas	US$	3,755	5,756	(35)%	
Group	NZ$	53,242	44,242	20%#	

* Post-NZ IFRS 16

# Excluding FX: 18% over last year

“It’s the long‐term stuff that really counts”

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Trading Update: Total Company

• Revenue increase of NZ$94.3 million includes:

• Air charter opportunities of NZ$23.8 million, but at lower margin levels

• Other new business of $67 million (Q1)

• Profit improvement dominated by Australian performance assisted by our exposure to multiple economies

“Busy people get things done”

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Tradin U date: New Zealand g p

• April trading saw revenues and profits decline dramatically, in Level 4 lockdown

• Post‐Level 4 lockdown (May to July) trading has improved significantly, and YTD revenue now just ahead of prior year

• Expectations for this trend to continue, albeit not at the elevated levels post‐Level 4 lockdown

• Expect half year result in line with prior year

• All divisions contributing with market share gains

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Tradin U date: Australia g p

• Our strongest regional performer, with expectations for the current results to continue

• New business gains/market share assisting

• Transport network performance assisting / regional branches

• Current COVID‐19 spike and increased restrictions have not disrupted or altered freight flow and/or volumes

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Tradin U date: Asia g p

• Benefit of PPE shipments April to June

• Southeast Asia a key area for stronger growth and development

• COVID‐19 infection rates on increase, but not impacting freight volumes, export or import

• Some restrictions on number of team members in branches

• Freight volume increases ex China creating space availability issues

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Trading Update: Europe

• April and May – tough trading conditions experienced

• June and July – marked improvement, and ahead of the year prior

• Summer holiday period (July/August) now underway, with the expected decline in volumes

• COVID‐19 increases seen recently do not appear to have had any impact on trading volumes

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Tradin U date: Americas g p

• Trading remains slow for Transport and CaroTrans with Warehousing and Air & Ocean improving

• Expect the Americas to take longer to recover as COVID‐19 infection levels continue to increase

• Customer trading is improving, however converting new customers is taking longer than expected

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Ca ital Ex enditure p p

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$155 m
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$80 m
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2022
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Spent in 2020 financial year $112 million on land & buildings Expected capital investment in FY21 $120 million deferred

FY22 spend likely to increase; dependent on trading developments

“Investing in our growth opportunities”

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Current Net Debt

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NET DEBT
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COVENANTS
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Net debt of $120 million Gearing ratio at 11.1% Undrawn facilities of $220 million

Interest Cover and Total Debt Cover Ratios remain well within banking requirements

“Money is for making things happen”

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Netherlands: Zaltbommel Stage 2
Completed: early 2020
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Netherlands: Born
Completed: 2018
New solar installation
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Melbourne: Epping II
Completed: June 2020
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Mt Maunganui: Mangatawa Targeted completion: August 2020

Our Customers

		Top industry verticals of our customers:
		DIY/Homeware	16%
		FMCG/Food/Beverages	15%
		Technology/Electronics	11%
		Retail	11%
		Medical/Healthcare	7%
Page	20	“Customer perception is the measure	of performance”

Sustainabilit y

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• Measurement of emissions: calendar 2019

• 1.66 million tonnes CO ‐e 2

• 97.7% freight related: air, road, rail, sea

• Carbon intensity factor improving/efficiency

• Increase likely in current year (airfreight charter activity)

• Initiatives:

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• Electric alternatives – forklifts, trucks, other vehicles

• Solar energy / green building construction

• Recycling / waste exchange / vegetable gardens

• Water collection / usage

• Customer engagement on freight mode usage, eg rail vs road

• “You can’t improve what you don’t measure”

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Global Su l Chain Status pp y

• Air freight:

• Remains volatile and expensive

• Improving from March/April levels

• Sea freight

• Usage improving / rates increasing

• “Blank” sailings causing space allocation issues

• Warehousing

• Enquiry on the increase

• Outsourcing for customers looking to offset fixed cost of owned warehousing

• Flight to quality / manufacturing hub diversity – multiple countries

  • “Our focus is on making things better”

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Priorities and Actions

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• Strong sales focus – retention of customers and gaining of new customers – high priority

• High standards; quality services

• No COVID‐19 related redundancies for our permanent team members

• Cash flow/cash collection a strong focus

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• Cost and margin management: branch/national level

• Salary review implemented 1[st] July 2020

• NZ / Australia

• 3.0%

• 1.6%

• Asia

• Europe/USA

Review in September

“We have work to do”

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Mainfrei ht Cor orate Governance g p

• We are proud of the governance that guides our Company

• We do not blindly follow perceived best practice; in some cases the interests of the Company and its shareholders are not best‐served by those guidelines

• We have applied the principles of good corporate governance and adopted robust measures that support our efforts to grow this magnificent Company, for the benefit of our team and shareholders around the world, for the next 100+ years

“One size does not fit all”

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Cor orate Governance – continued … p

• Mainfreight’s Board of Directors

• Comfortable with current level of six directors

• Tenure and experience are a key part of who we are – at Board, Management and Team level

• Board is comfortable with the independence of Simon Cotter, Bryan Mogridge, Kate Parsons and Richard Prebble

• Somewhat surprised and troubled that board composition is a topic of conversation, when facing threats of current pandemic and global recession, against the successful formula that has guided us profitably for a very long time

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We Continue To …

• Be positive and optimistic about the year ahead, with a hint of caution

• Believe our people, culture and quality are key differentiators

• Want to be useful and effective for our customers

• Seek growth and intensity for our network

• Think bigger and bolder, no matter the pandemic and economic situations

• Keep thinking and acting long term

• Maintain current strategic direction of the business

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• “Being useful feels good”

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The determination, positivity and hard work of our people has been nothing short of staggering; they deserve a huge thank you from all of us

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